Correlation Between Sphere Entertainment and Stagwell

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Can any of the company-specific risk be diversified away by investing in both Sphere Entertainment and Stagwell 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 Stagwell 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 Stagwell, you can compare the effects of market volatilities on Sphere Entertainment and Stagwell 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 Stagwell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sphere Entertainment and Stagwell.

Diversification Opportunities for Sphere Entertainment and Stagwell

SphereStagwellDiversified AwaySphereStagwellDiversified Away100%
-0.55
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Sphere and Stagwell is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and Stagwell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stagwell 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 Stagwell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stagwell has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and Stagwell go up and down completely randomly.

Pair Corralation between Sphere Entertainment and Stagwell

Given the investment horizon of 90 days Sphere Entertainment Co is expected to under-perform the Stagwell. But the stock apears to be less risky and, when comparing its historical volatility, Sphere Entertainment Co is 1.48 times less risky than Stagwell. The stock trades about -0.03 of its potential returns per unit of risk. The Stagwell is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  663.00  in Stagwell on November 27, 2024 and sell it today you would earn a total of  3.00  from holding Stagwell or generate 0.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Sphere Entertainment Co  vs.  Stagwell

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -1001020
JavaScript chart by amCharts 3.21.15SPHR STGW
       Timeline  
Sphere Entertainment 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Sphere Entertainment Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady technical indicators, Sphere Entertainment reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb3638404244464850
Stagwell 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Stagwell has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's technical and fundamental indicators remain fairly stable which may send shares a bit higher in March 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb66.577.58

Sphere Entertainment and Stagwell Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-7.01-5.25-3.49-1.73-0.02931.753.595.427.269.1 0.020.030.040.050.060.07
JavaScript chart by amCharts 3.21.15SPHR STGW
       Returns  

Pair Trading with Sphere Entertainment and Stagwell

The main advantage of trading using opposite Sphere Entertainment and Stagwell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sphere Entertainment position performs unexpectedly, Stagwell 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 Stagwell will offset losses from the drop in Stagwell's long position.
The idea behind Sphere Entertainment Co and Stagwell pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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