Correlation Between ALTRIA and Sphere Entertainment

Can any of the company-specific risk be diversified away by investing in both ALTRIA and Sphere Entertainment 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 ALTRIA and Sphere Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ALTRIA GROUP INC and Sphere Entertainment Co, you can compare the effects of market volatilities on ALTRIA and Sphere Entertainment 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 ALTRIA with a short position of Sphere Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALTRIA and Sphere Entertainment.

Diversification Opportunities for ALTRIA and Sphere Entertainment

0.38

Correlation Coefficient

ALTRIA  Sphere Entertainment

Weak diversification

The 3 months correlation between ALTRIA and Sphere is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding ALTRIA GROUP INC and Sphere Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sphere Entertainment and ALTRIA 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 ALTRIA GROUP INC are associated (or correlated) with Sphere Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sphere Entertainment has no effect on the direction of ALTRIA i.e., ALTRIA and Sphere Entertainment go up and down completely randomly.

Pair Corralation between ALTRIA and Sphere Entertainment

Assuming the 90 days trading horizon ALTRIA GROUP INC is expected to under-perform the Sphere Entertainment. But the bond apears to be less risky and, when comparing its historical volatility, ALTRIA GROUP INC is 1.34 times less risky than Sphere Entertainment. The bond trades about -0.1 of its potential returns per unit of risk. The Sphere Entertainment Co is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  4,433  in Sphere Entertainment Co on October 25, 2024 and sell it today you would lose (283.00) from holding Sphere Entertainment Co or give up 6.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

ALTRIA GROUP INC  vs.  Sphere Entertainment Co

ALTRIA GROUP INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALTRIA GROUP INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for ALTRIA GROUP INC investors.

Sphere Entertainment

Risk-Adjusted Performance

0 of 100

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 relatively invariable technical indicators, Sphere Entertainment is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with ALTRIA and Sphere Entertainment

The main advantage of trading using opposite ALTRIA and Sphere Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALTRIA position performs unexpectedly, Sphere Entertainment 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 Sphere Entertainment will offset losses from the drop in Sphere Entertainment's long position.

The idea behind ALTRIA GROUP INC and Sphere Entertainment Co 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 Commodity Directory module to find actively traded commodities issued by global exchanges.