Correlation Between Viemed Healthcare and Sphere Entertainment

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

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

Diversification Opportunities for Viemed Healthcare and Sphere Entertainment

-0.47

Correlation Coefficient

Viemed Healthcare  Sphere Entertainment

Very good diversification

The 3 months correlation between Viemed and Sphere is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Viemed Healthcare and Sphere Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sphere Entertainment and Viemed Healthcare 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 Viemed Healthcare 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 Viemed Healthcare i.e., Viemed Healthcare and Sphere Entertainment go up and down completely randomly.

Pair Corralation between Viemed Healthcare and Sphere Entertainment

Considering the 90-day investment horizon Viemed Healthcare is expected to under-perform the Sphere Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Viemed Healthcare is 1.41 times less risky than Sphere Entertainment. The stock trades about -0.13 of its potential returns per unit of risk. The Sphere Entertainment Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4,105  in Sphere Entertainment Co on December 1, 2024 and sell it today you would earn a total of  258.00  from holding Sphere Entertainment Co or generate 6.29% return on investment over 90 days.

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

Viemed Healthcare  vs.  Sphere Entertainment Co

Viemed Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Viemed Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Sphere Entertainment

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sphere Entertainment Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical indicators, Sphere Entertainment may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Viemed Healthcare and Sphere Entertainment

The main advantage of trading using opposite Viemed Healthcare and Sphere Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Viemed Healthcare 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 Viemed Healthcare 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.