Correlation Between Liberty Media and Sphere Entertainment
Can any of the company-specific risk be diversified away by investing in both Liberty Media 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 Liberty Media and Sphere Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Media and Sphere Entertainment Co, you can compare the effects of market volatilities on Liberty Media 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 Liberty Media with a short position of Sphere Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Media and Sphere Entertainment.
Diversification Opportunities for Liberty Media and Sphere Entertainment
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Liberty and Sphere is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Media and Sphere Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sphere Entertainment and Liberty Media 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 Liberty Media 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 Liberty Media i.e., Liberty Media and Sphere Entertainment go up and down completely randomly.
Pair Corralation between Liberty Media and Sphere Entertainment
Assuming the 90 days horizon Liberty Media is expected to generate 0.85 times more return on investment than Sphere Entertainment. However, Liberty Media is 1.17 times less risky than Sphere Entertainment. It trades about 0.17 of its potential returns per unit of risk. Sphere Entertainment Co is currently generating about -0.14 per unit of risk. If you would invest 7,299 in Liberty Media on August 24, 2024 and sell it today you would earn a total of 516.00 from holding Liberty Media or generate 7.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liberty Media vs. Sphere Entertainment Co
Performance |
| Timeline |
| Liberty Media |
| Sphere Entertainment |
Liberty Media and Sphere Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Media and Sphere Entertainment
The main advantage of trading using opposite Liberty Media and Sphere Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Media 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.| Liberty Media vs. Atlanta Braves Holdings, | Liberty Media vs. Madison Square Garden | Liberty Media vs. News Corp B | Liberty Media vs. News Corp A |
| Sphere Entertainment vs. Nexstar Broadcasting Group | Sphere Entertainment vs. Yuexiu Transport Infrastructure | Sphere Entertainment vs. Under Armour C | Sphere Entertainment vs. Citi Trends |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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