Correlation Between Amgen and Sphere Entertainment
Can any of the company-specific risk be diversified away by investing in both Amgen 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 Amgen and Sphere Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amgen Inc and Sphere Entertainment Co, you can compare the effects of market volatilities on Amgen 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 Amgen with a short position of Sphere Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amgen and Sphere Entertainment.
Diversification Opportunities for Amgen and Sphere Entertainment
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Amgen and Sphere is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Amgen 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 Amgen 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 Amgen 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 Amgen i.e., Amgen and Sphere Entertainment go up and down completely randomly.
Pair Corralation between Amgen and Sphere Entertainment
Given the investment horizon of 90 days Amgen is expected to generate 1.27 times less return on investment than Sphere Entertainment. But when comparing it to its historical volatility, Amgen Inc is 1.71 times less risky than Sphere Entertainment. It trades about 0.42 of its potential returns per unit of risk. Sphere Entertainment Co is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 4,151 in Sphere Entertainment Co on November 3, 2024 and sell it today you would earn a total of 528.00 from holding Sphere Entertainment Co or generate 12.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amgen Inc vs. Sphere Entertainment Co
Performance |
| Timeline |
| Amgen Inc |
| Sphere Entertainment |
Amgen and Sphere Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amgen and Sphere Entertainment
The main advantage of trading using opposite Amgen and Sphere Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amgen 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 Amgen 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.| Sphere Entertainment vs. Sonida Senior Living | Sphere Entertainment vs. Universal Music Group | Sphere Entertainment vs. NetEase | Sphere Entertainment vs. Jabil Circuit |
Check out your portfolio center.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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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