Correlation Between Sphere Entertainment and Arrow Financial
Can any of the company-specific risk be diversified away by investing in both Sphere Entertainment and Arrow Financial 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 Arrow Financial 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 Arrow Financial, you can compare the effects of market volatilities on Sphere Entertainment and Arrow Financial 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 Arrow Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sphere Entertainment and Arrow Financial.
Diversification Opportunities for Sphere Entertainment and Arrow Financial
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sphere and Arrow is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and Arrow Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Financial 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 Arrow Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Financial has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and Arrow Financial go up and down completely randomly.
Pair Corralation between Sphere Entertainment and Arrow Financial
Given the investment horizon of 90 days Sphere Entertainment Co is expected to under-perform the Arrow Financial. In addition to that, Sphere Entertainment is 2.4 times more volatile than Arrow Financial. It trades about -0.25 of its total potential returns per unit of risk. Arrow Financial is currently generating about -0.27 per unit of volatility. If you would invest 3,420 in Arrow Financial on September 12, 2024 and sell it today you would lose (224.00) from holding Arrow Financial or give up 6.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sphere Entertainment Co vs. Arrow Financial
Performance |
| Timeline |
| Sphere Entertainment |
| Arrow Financial |
Sphere Entertainment and Arrow Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sphere Entertainment and Arrow Financial
The main advantage of trading using opposite Sphere Entertainment and Arrow Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sphere Entertainment position performs unexpectedly, Arrow Financial 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 Arrow Financial will offset losses from the drop in Arrow Financial's long position.| Sphere Entertainment vs. Aeye Inc | Sphere Entertainment vs. Ep Emerging Markets | Sphere Entertainment vs. ALPS Emerging Sector | Sphere Entertainment vs. First Physicians Capital |
| Arrow Financial vs. Heritage Commerce Corp | Arrow Financial vs. Westamerica Bancorporation | Arrow Financial vs. Heritage Financial | Arrow Financial vs. National Bankshares |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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