Correlation Between Western Asset and Sphere Entertainment
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and Sphere Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Investment and Sphere Entertainment Co, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of Sphere Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Sphere Entertainment.
Diversification Opportunities for Western Asset and Sphere Entertainment
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Western and Sphere is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Investment and Sphere Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sphere Entertainment and Western Asset 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 Western Asset Investment 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 Western Asset i.e., Western Asset and Sphere Entertainment go up and down completely randomly.
Pair Corralation between Western Asset and Sphere Entertainment
Considering the 90-day investment horizon Western Asset is expected to generate 6.08 times less return on investment than Sphere Entertainment. But when comparing it to its historical volatility, Western Asset Investment is 5.16 times less risky than Sphere Entertainment. It trades about 0.04 of its potential returns per unit of risk. Sphere Entertainment Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,197 in Sphere Entertainment Co on September 4, 2024 and sell it today you would earn a total of 858.00 from holding Sphere Entertainment Co or generate 26.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Investment vs. Sphere Entertainment Co
Performance |
| Timeline |
| Western Asset Investment |
| Sphere Entertainment |
Western Asset and Sphere Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Sphere Entertainment
The main advantage of trading using opposite Western Asset and Sphere Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. Pioneer Floating Rate | Western Asset vs. The Gabelli Equity | Western Asset vs. Pioneer Municipal High | Western Asset vs. Nuveen Global High |
| Sphere Entertainment vs. Dine Brands Global | Sphere Entertainment vs. NextNav Warrant | Sphere Entertainment vs. Rave Restaurant Group | Sphere Entertainment vs. Datadog |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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