Correlation Between Sphere Entertainment and Flex
Can any of the company-specific risk be diversified away by investing in both Sphere Entertainment and Flex 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 Flex 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 Flex, you can compare the effects of market volatilities on Sphere Entertainment and Flex 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 Flex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sphere Entertainment and Flex.
Diversification Opportunities for Sphere Entertainment and Flex
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sphere and Flex is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and Flex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flex 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 Flex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flex has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and Flex go up and down completely randomly.
Pair Corralation between Sphere Entertainment and Flex
Given the investment horizon of 90 days Sphere Entertainment is expected to generate 2.32 times less return on investment than Flex. But when comparing it to its historical volatility, Sphere Entertainment Co is 1.33 times less risky than Flex. It trades about 0.05 of its potential returns per unit of risk. Flex is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,214 in Flex on September 2, 2024 and sell it today you would earn a total of 2,683 from holding Flex or generate 221.0% 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. Flex
Performance |
| Timeline |
| Sphere Entertainment |
| Flex |
Sphere Entertainment and Flex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sphere Entertainment and Flex
The main advantage of trading using opposite Sphere Entertainment and Flex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sphere Entertainment position performs unexpectedly, Flex 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 Flex will offset losses from the drop in Flex's long position.| Sphere Entertainment vs. Zane Interactive Publishing | Sphere Entertainment vs. Sable Offshore Corp | Sphere Entertainment vs. AMREP | Sphere Entertainment vs. Coursera |
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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