Correlation Between Sphere Entertainment and GENERAL

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

Diversification Opportunities for Sphere Entertainment and GENERAL

-0.36
  Correlation Coefficient

Very good diversification

The 3 months correlation between Sphere and GENERAL is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and GENERAL ELEC CAP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GENERAL ELEC CAP 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 GENERAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GENERAL ELEC CAP has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and GENERAL go up and down completely randomly.

Pair Corralation between Sphere Entertainment and GENERAL

Given the investment horizon of 90 days Sphere Entertainment Co is expected to generate 1.82 times more return on investment than GENERAL. However, Sphere Entertainment is 1.82 times more volatile than GENERAL ELEC CAP. It trades about 0.05 of its potential returns per unit of risk. GENERAL ELEC CAP is currently generating about -0.02 per unit of risk. If you would invest  3,197  in Sphere Entertainment Co on September 4, 2024 and sell it today you would earn a total of  908.00  from holding Sphere Entertainment Co or generate 28.4% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy34.55%
ValuesDaily Returns

Sphere Entertainment Co  vs.  GENERAL ELEC CAP

 Performance 
       Timeline  
Sphere Entertainment 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Sphere Entertainment Co has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical indicators, Sphere Entertainment is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.
GENERAL ELEC CAP 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days GENERAL ELEC CAP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for GENERAL ELEC CAP investors.

Sphere Entertainment and GENERAL Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sphere Entertainment and GENERAL

The main advantage of trading using opposite Sphere Entertainment and GENERAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sphere Entertainment position performs unexpectedly, GENERAL 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 GENERAL will offset losses from the drop in GENERAL's long position.
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The idea behind Sphere Entertainment Co and GENERAL ELEC CAP 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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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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