Correlation Between BARRICK and Sphere Entertainment

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

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

Diversification Opportunities for BARRICK and Sphere Entertainment

0.55

Correlation Coefficient

BARRICK  Sphere Entertainment

Very weak diversification

The 3 months correlation between BARRICK and Sphere is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding BARRICK NORTH AMER and Sphere Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sphere Entertainment and BARRICK 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 BARRICK NORTH AMER 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 BARRICK i.e., BARRICK and Sphere Entertainment go up and down completely randomly.

Pair Corralation between BARRICK and Sphere Entertainment

Assuming the 90 days trading horizon BARRICK NORTH AMER is expected to generate 26.63 times more return on investment than Sphere Entertainment. However, BARRICK is 26.63 times more volatile than Sphere Entertainment Co. It trades about 0.08 of its potential returns per unit of risk. Sphere Entertainment Co is currently generating about 0.05 per unit of risk. If you would invest  10,973  in BARRICK NORTH AMER on October 23, 2024 and sell it today you would lose (727.00) from holding BARRICK NORTH AMER or give up 6.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	80.0%
Values	Daily Returns

BARRICK NORTH AMER  vs.  Sphere Entertainment Co

BARRICK NORTH AMER

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BARRICK NORTH AMER has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BARRICK is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the 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 recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with BARRICK and Sphere Entertainment

The main advantage of trading using opposite BARRICK and Sphere Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BARRICK 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 BARRICK NORTH AMER 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.