Correlation Between Sphere Entertainment and HE Equipment
Can any of the company-specific risk be diversified away by investing in both Sphere Entertainment and HE Equipment 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 HE Equipment 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 HE Equipment Services, you can compare the effects of market volatilities on Sphere Entertainment and HE Equipment 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 HE Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sphere Entertainment and HE Equipment.
Diversification Opportunities for Sphere Entertainment and HE Equipment
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sphere and HEES is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and HE Equipment Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HE Equipment Services 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 HE Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HE Equipment Services has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and HE Equipment go up and down completely randomly.
Pair Corralation between Sphere Entertainment and HE Equipment
Given the investment horizon of 90 days Sphere Entertainment Co is expected to under-perform the HE Equipment. But the stock apears to be less risky and, when comparing its historical volatility, Sphere Entertainment Co is 1.41 times less risky than HE Equipment. The stock trades about -0.02 of its potential returns per unit of risk. The HE Equipment Services is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 5,225 in HE Equipment Services on September 1, 2024 and sell it today you would earn a total of 749.00 from holding HE Equipment Services or generate 14.33% 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. HE Equipment Services
Performance |
| Timeline |
| Sphere Entertainment |
| HE Equipment Services |
Sphere Entertainment and HE Equipment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sphere Entertainment and HE Equipment
The main advantage of trading using opposite Sphere Entertainment and HE Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sphere Entertainment position performs unexpectedly, HE Equipment 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 HE Equipment will offset losses from the drop in HE Equipment's long position.| Sphere Entertainment vs. JD Sports Fashion | Sphere Entertainment vs. Sun Country Airlines | Sphere Entertainment vs. SFL Corporation | Sphere Entertainment vs. Sabre Corpo |
| HE Equipment vs. McGrath RentCorp | HE Equipment vs. Herc Holdings | HE Equipment vs. PROG Holdings | HE Equipment vs. Custom Truck One |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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