Correlation Between KLA Tencor and Sphere Entertainment
Can any of the company-specific risk be diversified away by investing in both KLA Tencor 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 KLA Tencor and Sphere Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KLA Tencor and Sphere Entertainment Co, you can compare the effects of market volatilities on KLA Tencor 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 KLA Tencor with a short position of Sphere Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of KLA Tencor and Sphere Entertainment.
Diversification Opportunities for KLA Tencor and Sphere Entertainment
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KLA and Sphere is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding KLA Tencor and Sphere Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sphere Entertainment and KLA Tencor 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 KLA Tencor 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 KLA Tencor i.e., KLA Tencor and Sphere Entertainment go up and down completely randomly.
Pair Corralation between KLA Tencor and Sphere Entertainment
Given the investment horizon of 90 days KLA Tencor is expected to generate 0.81 times more return on investment than Sphere Entertainment. However, KLA Tencor is 1.24 times less risky than Sphere Entertainment. It trades about 0.06 of its potential returns per unit of risk. Sphere Entertainment Co is currently generating about 0.02 per unit of risk. If you would invest 45,573 in KLA Tencor on August 29, 2024 and sell it today you would earn a total of 17,641 from holding KLA Tencor or generate 38.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KLA Tencor vs. Sphere Entertainment Co
Performance |
| Timeline |
| KLA Tencor |
| Sphere Entertainment |
KLA Tencor and Sphere Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KLA Tencor and Sphere Entertainment
The main advantage of trading using opposite KLA Tencor and Sphere Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KLA Tencor 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.| KLA Tencor vs. Applied Materials | KLA Tencor vs. ASML Holding NV | KLA Tencor vs. Axcelis Technologies | KLA Tencor vs. Teradyne |
| Sphere Entertainment vs. MagnaChip Semiconductor | Sphere Entertainment vs. Taiwan Semiconductor Manufacturing | Sphere Entertainment vs. Vishay Intertechnology | Sphere Entertainment vs. Ryanair Holdings PLC |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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