Correlation Between Sphere Entertainment and Universal
Can any of the company-specific risk be diversified away by investing in both Sphere Entertainment and Universal 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 Universal 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 Universal, you can compare the effects of market volatilities on Sphere Entertainment and Universal 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 Universal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sphere Entertainment and Universal.
Diversification Opportunities for Sphere Entertainment and Universal
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sphere and Universal is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and Universal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal 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 Universal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and Universal go up and down completely randomly.
Pair Corralation between Sphere Entertainment and Universal
Given the investment horizon of 90 days Sphere Entertainment Co is expected to under-perform the Universal. In addition to that, Sphere Entertainment is 3.09 times more volatile than Universal. It trades about -0.14 of its total potential returns per unit of risk. Universal is currently generating about -0.02 per unit of volatility. If you would invest 5,395 in Universal on November 28, 2024 and sell it today you would lose (17.00) from holding Universal or give up 0.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Sphere Entertainment Co vs. Universal
Performance |
| Timeline |
| Sphere Entertainment |
| Universal |
Sphere Entertainment and Universal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sphere Entertainment and Universal
The main advantage of trading using opposite Sphere Entertainment and Universal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sphere Entertainment position performs unexpectedly, Universal 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 Universal will offset losses from the drop in Universal's long position.| Sphere Entertainment vs. PennantPark Floating Rate | Sphere Entertainment vs. Cedar Realty Trust | Sphere Entertainment vs. Aldel Financial II | Sphere Entertainment vs. PepsiCo |
| Universal vs. Imperial Brands PLC | Universal vs. Japan Tobacco ADR | Universal vs. Philip Morris International | Universal vs. Turning Point Brands |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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