Correlation Between Sphere Entertainment and Southern
Can any of the company-specific risk be diversified away by investing in both Sphere Entertainment and Southern 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 Southern 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 Southern Co, you can compare the effects of market volatilities on Sphere Entertainment and Southern 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 Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sphere Entertainment and Southern.
Diversification Opportunities for Sphere Entertainment and Southern
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sphere and Southern is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and Southern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern 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 Southern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and Southern go up and down completely randomly.
Pair Corralation between Sphere Entertainment and Southern
Given the investment horizon of 90 days Sphere Entertainment Co is expected to under-perform the Southern. In addition to that, Sphere Entertainment is 4.55 times more volatile than Southern Co. It trades about -0.14 of its total potential returns per unit of risk. Southern Co is currently generating about -0.36 per unit of volatility. If you would invest 2,392 in Southern Co on September 13, 2024 and sell it today you would lose (89.00) from holding Southern Co or give up 3.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Sphere Entertainment Co vs. Southern Co
Performance |
| Timeline |
| Sphere Entertainment |
| Southern |
Sphere Entertainment and Southern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sphere Entertainment and Southern
The main advantage of trading using opposite Sphere Entertainment and Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sphere Entertainment position performs unexpectedly, Southern 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 Southern will offset losses from the drop in Southern's long position.| Sphere Entertainment vs. Arhaus Inc | Sphere Entertainment vs. Algoma Steel Group | Sphere Entertainment vs. CECO Environmental Corp | Sphere Entertainment vs. The Gap, |
| Southern vs. Consumers Energy | Southern vs. CMS Energy | Southern vs. Cadiz Depositary Shares | Southern vs. DTE Energy |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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