Correlation Between Algoma Steel and Sphere Entertainment
Can any of the company-specific risk be diversified away by investing in both Algoma Steel 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 Algoma Steel and Sphere Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Algoma Steel Group and Sphere Entertainment Co, you can compare the effects of market volatilities on Algoma Steel 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 Algoma Steel with a short position of Sphere Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algoma Steel and Sphere Entertainment.
Diversification Opportunities for Algoma Steel and Sphere Entertainment
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Algoma and Sphere is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and Sphere Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sphere Entertainment and Algoma Steel 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 Algoma Steel Group 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 Algoma Steel i.e., Algoma Steel and Sphere Entertainment go up and down completely randomly.
Pair Corralation between Algoma Steel and Sphere Entertainment
Given the investment horizon of 90 days Algoma Steel Group is expected to generate 0.72 times more return on investment than Sphere Entertainment. However, Algoma Steel Group is 1.39 times less risky than Sphere Entertainment. It trades about -0.23 of its potential returns per unit of risk. Sphere Entertainment Co is currently generating about -0.2 per unit of risk. If you would invest 1,095 in Algoma Steel Group on September 14, 2024 and sell it today you would lose (85.00) from holding Algoma Steel Group or give up 7.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algoma Steel Group vs. Sphere Entertainment Co
Performance |
| Timeline |
| Algoma Steel Group |
| Sphere Entertainment |
Algoma Steel and Sphere Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algoma Steel and Sphere Entertainment
The main advantage of trading using opposite Algoma Steel and Sphere Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algoma Steel 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.| Algoma Steel vs. Olympic Steel | Algoma Steel vs. Steel Dynamics | Algoma Steel vs. Commercial Metals | Algoma Steel vs. Nucor Corp |
| Sphere Entertainment vs. Liberty Media | Sphere Entertainment vs. Atlanta Braves Holdings, | Sphere Entertainment vs. News Corp B | Sphere Entertainment vs. News Corp A |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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