Correlation Between Sphere Entertainment and Nexstar Broadcasting
Can any of the company-specific risk be diversified away by investing in both Sphere Entertainment and Nexstar Broadcasting 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 Nexstar Broadcasting 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 Nexstar Broadcasting Group, you can compare the effects of market volatilities on Sphere Entertainment and Nexstar Broadcasting 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 Nexstar Broadcasting. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sphere Entertainment and Nexstar Broadcasting.
Diversification Opportunities for Sphere Entertainment and Nexstar Broadcasting
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sphere and Nexstar is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and Nexstar Broadcasting Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexstar Broadcasting 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 Nexstar Broadcasting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexstar Broadcasting has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and Nexstar Broadcasting go up and down completely randomly.
Pair Corralation between Sphere Entertainment and Nexstar Broadcasting
Given the investment horizon of 90 days Sphere Entertainment Co is expected to generate 1.54 times more return on investment than Nexstar Broadcasting. However, Sphere Entertainment is 1.54 times more volatile than Nexstar Broadcasting Group. It trades about 0.05 of its potential returns per unit of risk. Nexstar Broadcasting Group is currently generating about 0.01 per unit of risk. If you would invest 2,319 in Sphere Entertainment Co on August 24, 2024 and sell it today you would earn a total of 1,785 from holding Sphere Entertainment Co or generate 76.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sphere Entertainment Co vs. Nexstar Broadcasting Group
Performance |
| Timeline |
| Sphere Entertainment |
| Nexstar Broadcasting |
Sphere Entertainment and Nexstar Broadcasting Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sphere Entertainment and Nexstar Broadcasting
The main advantage of trading using opposite Sphere Entertainment and Nexstar Broadcasting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sphere Entertainment position performs unexpectedly, Nexstar Broadcasting 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 Nexstar Broadcasting will offset losses from the drop in Nexstar Broadcasting's long position.| Sphere Entertainment vs. Nexstar Broadcasting Group | Sphere Entertainment vs. Yuexiu Transport Infrastructure | Sphere Entertainment vs. Under Armour C | Sphere Entertainment vs. Citi Trends |
| Nexstar Broadcasting vs. News Corp B | Nexstar Broadcasting vs. Fox Corp Class | Nexstar Broadcasting vs. Liberty Media | Nexstar Broadcasting vs. AMC Networks |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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