Correlation Between Sphere Entertainment and Newpark Resources
Can any of the company-specific risk be diversified away by investing in both Sphere Entertainment and Newpark Resources 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 Newpark Resources 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 Newpark Resources, you can compare the effects of market volatilities on Sphere Entertainment and Newpark Resources 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 Newpark Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sphere Entertainment and Newpark Resources.
Diversification Opportunities for Sphere Entertainment and Newpark Resources
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sphere and Newpark is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and Newpark Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newpark Resources 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 Newpark Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newpark Resources has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and Newpark Resources go up and down completely randomly.
Pair Corralation between Sphere Entertainment and Newpark Resources
Given the investment horizon of 90 days Sphere Entertainment Co is expected to under-perform the Newpark Resources. But the stock apears to be less risky and, when comparing its historical volatility, Sphere Entertainment Co is 1.32 times less risky than Newpark Resources. The stock trades about -0.05 of its potential returns per unit of risk. The Newpark Resources is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 673.00 in Newpark Resources on August 31, 2024 and sell it today you would earn a total of 163.00 from holding Newpark Resources or generate 24.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sphere Entertainment Co vs. Newpark Resources
Performance |
| Timeline |
| Sphere Entertainment |
| Newpark Resources |
Sphere Entertainment and Newpark Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sphere Entertainment and Newpark Resources
The main advantage of trading using opposite Sphere Entertainment and Newpark Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sphere Entertainment position performs unexpectedly, Newpark Resources 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 Newpark Resources will offset losses from the drop in Newpark Resources' long position.| Sphere Entertainment vs. Ihuman Inc | Sphere Entertainment vs. GoHealth | Sphere Entertainment vs. Aspen Insurance Holdings | Sphere Entertainment vs. Relx PLC ADR |
| Newpark Resources vs. Now Inc | Newpark Resources vs. Bristow Group | Newpark Resources vs. Helix Energy Solutions | Newpark Resources vs. Oceaneering International |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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