Correlation Between Lucid and Sphere Entertainment
Can any of the company-specific risk be diversified away by investing in both Lucid 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 Lucid and Sphere Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lucid Group and Sphere Entertainment Co, you can compare the effects of market volatilities on Lucid 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 Lucid with a short position of Sphere Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lucid and Sphere Entertainment.
Diversification Opportunities for Lucid and Sphere Entertainment
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lucid and Sphere is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Lucid 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 Lucid 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 Lucid 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 Lucid i.e., Lucid and Sphere Entertainment go up and down completely randomly.
Pair Corralation between Lucid and Sphere Entertainment
Given the investment horizon of 90 days Lucid Group is expected to under-perform the Sphere Entertainment. In addition to that, Lucid is 1.54 times more volatile than Sphere Entertainment Co. It trades about -0.03 of its total potential returns per unit of risk. Sphere Entertainment Co is currently generating about 0.06 per unit of volatility. If you would invest 1,966 in Sphere Entertainment Co on September 5, 2024 and sell it today you would earn a total of 2,089 from holding Sphere Entertainment Co or generate 106.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lucid Group vs. Sphere Entertainment Co
Performance |
| Timeline |
| Lucid Group |
| Sphere Entertainment |
Lucid and Sphere Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lucid and Sphere Entertainment
The main advantage of trading using opposite Lucid and Sphere Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lucid 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 Lucid Group 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. Flexible Solutions International | Sphere Entertainment vs. Stepan Company | Sphere Entertainment vs. NL Industries | Sphere Entertainment vs. Papaya Growth Opportunity |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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