Correlation Between Sphere Entertainment and American Picture
Can any of the company-specific risk be diversified away by investing in both Sphere Entertainment and American Picture 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 Sphere Entertainment and American Picture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sphere Entertainment Co and American Picture House, you can compare the effects of market volatilities on Sphere Entertainment and American Picture 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 Sphere Entertainment with a short position of American Picture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sphere Entertainment and American Picture.
Diversification Opportunities for Sphere Entertainment and American Picture
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sphere and American is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and American Picture House in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Picture House and Sphere Entertainment 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 Sphere Entertainment Co are associated (or correlated) with American Picture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Picture House has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and American Picture go up and down completely randomly.
Pair Corralation between Sphere Entertainment and American Picture
Given the investment horizon of 90 days Sphere Entertainment Co is expected to under-perform the American Picture. But the stock apears to be less risky and, when comparing its historical volatility, Sphere Entertainment Co is 1.46 times less risky than American Picture. The stock trades about -0.16 of its potential returns per unit of risk. The American Picture House is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 28.00 in American Picture House on August 28, 2024 and sell it today you would earn a total of 1.00 from holding American Picture House or generate 3.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sphere Entertainment Co vs. American Picture House
Performance |
| Timeline |
| Sphere Entertainment |
| American Picture House |
Sphere Entertainment and American Picture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sphere Entertainment and American Picture
The main advantage of trading using opposite Sphere Entertainment and American Picture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sphere Entertainment position performs unexpectedly, American Picture 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 American Picture will offset losses from the drop in American Picture's long position.| Sphere Entertainment vs. Tandem Diabetes Care | Sphere Entertainment vs. Weyco Group | Sphere Entertainment vs. Viemed Healthcare | Sphere Entertainment vs. Amgen Inc |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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