Correlation Between Sphere Entertainment and CBOE Volatility
Can any of the company-specific risk be diversified away by investing in both Sphere Entertainment and CBOE Volatility 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 CBOE Volatility 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 CBOE Volatility Index, you can compare the effects of market volatilities on Sphere Entertainment and CBOE Volatility 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 CBOE Volatility. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sphere Entertainment and CBOE Volatility.
Diversification Opportunities for Sphere Entertainment and CBOE Volatility
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sphere and CBOE is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and CBOE Volatility Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBOE Volatility Index 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 CBOE Volatility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBOE Volatility Index has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and CBOE Volatility go up and down completely randomly.
Pair Corralation between Sphere Entertainment and CBOE Volatility
Given the investment horizon of 90 days Sphere Entertainment is expected to generate 3.94 times less return on investment than CBOE Volatility. But when comparing it to its historical volatility, Sphere Entertainment Co is 3.26 times less risky than CBOE Volatility. It trades about 0.04 of its potential returns per unit of risk. CBOE Volatility Index is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,311 in CBOE Volatility Index on September 1, 2024 and sell it today you would earn a total of 40.00 from holding CBOE Volatility Index or generate 3.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.92% |
| Values | Daily Returns |
Sphere Entertainment Co vs. CBOE Volatility Index
Performance |
| Timeline |
Sphere Entertainment and CBOE Volatility Volatility Contrast
Predicted Return Density |
| Returns |
Sphere Entertainment Co
Pair trading matchups for Sphere Entertainment
CBOE Volatility Index
Pair trading matchups for CBOE Volatility
Pair Trading with Sphere Entertainment and CBOE Volatility
The main advantage of trading using opposite Sphere Entertainment and CBOE Volatility positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sphere Entertainment position performs unexpectedly, CBOE Volatility 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 CBOE Volatility will offset losses from the drop in CBOE Volatility's long position.| Sphere Entertainment vs. JD Sports Fashion | Sphere Entertainment vs. Sun Country Airlines | Sphere Entertainment vs. SFL Corporation | Sphere Entertainment vs. Sabre Corpo |
| CBOE Volatility vs. Maiden Holdings | CBOE Volatility vs. MGIC Investment Corp | CBOE Volatility vs. Contagious Gaming | CBOE Volatility vs. Northstar Clean Technologies |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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