Correlation Between Sphere Entertainment and Summit Materials
Can any of the company-specific risk be diversified away by investing in both Sphere Entertainment and Summit Materials 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 Summit Materials 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 Summit Materials, you can compare the effects of market volatilities on Sphere Entertainment and Summit Materials 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 Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sphere Entertainment and Summit Materials.
Diversification Opportunities for Sphere Entertainment and Summit Materials
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sphere and Summit is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials 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 Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and Summit Materials go up and down completely randomly.
Pair Corralation between Sphere Entertainment and Summit Materials
Given the investment horizon of 90 days Sphere Entertainment Co is expected to under-perform the Summit Materials. But the stock apears to be less risky and, when comparing its historical volatility, Sphere Entertainment Co is 1.01 times less risky than Summit Materials. The stock trades about -0.02 of its potential returns per unit of risk. The Summit Materials is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 4,741 in Summit Materials on September 1, 2024 and sell it today you would earn a total of 353.00 from holding Summit Materials or generate 7.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sphere Entertainment Co vs. Summit Materials
Performance |
| Timeline |
| Sphere Entertainment |
| Summit Materials |
Sphere Entertainment and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sphere Entertainment and Summit Materials
The main advantage of trading using opposite Sphere Entertainment and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sphere Entertainment position performs unexpectedly, Summit Materials 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 Summit Materials will offset losses from the drop in Summit Materials' long position.| Sphere Entertainment vs. JD Sports Fashion | Sphere Entertainment vs. Sun Country Airlines | Sphere Entertainment vs. SFL Corporation | Sphere Entertainment vs. Sabre Corpo |
| Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. James Hardie Industries | Summit Materials vs. Eagle Materials |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |