Correlation Between Sphere Entertainment and Xponential Fitness

Can any of the company-specific risk be diversified away by investing in both Sphere Entertainment and Xponential Fitness at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sphere Entertainment and Xponential Fitness into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sphere Entertainment Co and Xponential Fitness, you can compare the effects of market volatilities on Sphere Entertainment and Xponential Fitness and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Sphere Entertainment with a short position of Xponential Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sphere Entertainment and Xponential Fitness.

Diversification Opportunities for Sphere Entertainment and Xponential Fitness

0.91

Correlation Coefficient

Sphere Entertainment  Xponential Fitness

Almost no diversification

The 3 months correlation between Sphere and Xponential is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and Xponential Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xponential Fitness and Sphere Entertainment is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Sphere Entertainment Co are associated (or correlated) with Xponential Fitness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xponential Fitness has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and Xponential Fitness go up and down completely randomly.

Pair Corralation between Sphere Entertainment and Xponential Fitness

Given the investment horizon of 90 days Sphere Entertainment Co is expected to generate 0.43 times more return on investment than Xponential Fitness. However, Sphere Entertainment Co is 2.33 times less risky than Xponential Fitness. It trades about -0.08 of its potential returns per unit of risk. Xponential Fitness is currently generating about -0.06 per unit of risk. If you would invest  4,015  in Sphere Entertainment Co on December 29, 2024 and sell it today you would lose (637.00) from holding Sphere Entertainment Co or give up 15.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Sphere Entertainment Co  vs.  Xponential Fitness

Sphere Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sphere Entertainment Co has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's technical indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Xponential Fitness

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xponential Fitness has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Sphere Entertainment and Xponential Fitness

The main advantage of trading using opposite Sphere Entertainment and Xponential Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sphere Entertainment position performs unexpectedly, Xponential Fitness can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Xponential Fitness will offset losses from the drop in Xponential Fitness' long position.

The idea behind Sphere Entertainment Co and Xponential Fitness pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Fundamental Analysis module to view fundamental data based on most recent published financial statements.