Correlation Between Sphere Entertainment and Netflix
Can any of the company-specific risk be diversified away by investing in both Sphere Entertainment and Netflix 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 Netflix 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 Netflix, you can compare the effects of market volatilities on Sphere Entertainment and Netflix 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 Netflix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sphere Entertainment and Netflix.
Diversification Opportunities for Sphere Entertainment and Netflix
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sphere and Netflix is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and Netflix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netflix 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 Netflix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netflix has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and Netflix go up and down completely randomly.
Pair Corralation between Sphere Entertainment and Netflix
Given the investment horizon of 90 days Sphere Entertainment is expected to generate 1.38 times less return on investment than Netflix. In addition to that, Sphere Entertainment is 1.55 times more volatile than Netflix. It trades about 0.05 of its total potential returns per unit of risk. Netflix is currently generating about 0.11 per unit of volatility. If you would invest 30,556 in Netflix on August 27, 2024 and sell it today you would earn a total of 59,223 from holding Netflix or generate 193.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sphere Entertainment Co vs. Netflix
Performance |
| Timeline |
| Sphere Entertainment |
| Netflix |
Sphere Entertainment and Netflix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sphere Entertainment and Netflix
The main advantage of trading using opposite Sphere Entertainment and Netflix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sphere Entertainment position performs unexpectedly, Netflix 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 Netflix will offset losses from the drop in Netflix's long position.| Sphere Entertainment vs. Sellas Life Sciences | Sphere Entertainment vs. Red Branch Technologies | Sphere Entertainment vs. Valneva SE ADR | Sphere Entertainment vs. Lipocine |
| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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