Correlation Between Sphere Entertainment and Academy Sports
Can any of the company-specific risk be diversified away by investing in both Sphere Entertainment and Academy Sports 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 Academy Sports 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 Academy Sports Outdoors, you can compare the effects of market volatilities on Sphere Entertainment and Academy Sports 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 Academy Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sphere Entertainment and Academy Sports.
Diversification Opportunities for Sphere Entertainment and Academy Sports
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sphere and Academy is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and Academy Sports Outdoors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Academy Sports Outdoors 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 Academy Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Academy Sports Outdoors has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and Academy Sports go up and down completely randomly.
Pair Corralation between Sphere Entertainment and Academy Sports
Given the investment horizon of 90 days Sphere Entertainment Co is expected to generate 0.98 times more return on investment than Academy Sports. However, Sphere Entertainment Co is 1.02 times less risky than Academy Sports. It trades about -0.07 of its potential returns per unit of risk. Academy Sports Outdoors is currently generating about -0.1 per unit of risk. If you would invest 3,094 in Sphere Entertainment Co on January 12, 2025 and sell it today you would lose (385.00) from holding Sphere Entertainment Co or give up 12.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sphere Entertainment Co vs. Academy Sports Outdoors
Performance |
| Timeline |
| Sphere Entertainment |
| Academy Sports Outdoors |
Sphere Entertainment and Academy Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sphere Entertainment and Academy Sports
The main advantage of trading using opposite Sphere Entertainment and Academy Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sphere Entertainment position performs unexpectedly, Academy Sports 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 Academy Sports will offset losses from the drop in Academy Sports' long position.| Sphere Entertainment vs. MGIC Investment Corp | Sphere Entertainment vs. ChampionX | Sphere Entertainment vs. Trio Tech International | Sphere Entertainment vs. SEI Investments |
| Academy Sports vs. Shoe Carnival | Academy Sports vs. Citi Trends | Academy Sports vs. Zumiez Inc | Academy Sports vs. Buckle 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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