Correlation Between Scandinavian Tobacco and Sphere Entertainment
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and Sphere Entertainment 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 Scandinavian Tobacco and Sphere Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scandinavian Tobacco Group and Sphere Entertainment Co, you can compare the effects of market volatilities on Scandinavian Tobacco and Sphere Entertainment 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 Scandinavian Tobacco with a short position of Sphere Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and Sphere Entertainment.
Diversification Opportunities for Scandinavian Tobacco and Sphere Entertainment
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Scandinavian and Sphere is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and Sphere Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sphere Entertainment and Scandinavian Tobacco 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 Scandinavian Tobacco Group are associated (or correlated) with Sphere Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sphere Entertainment has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and Sphere Entertainment go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and Sphere Entertainment
Assuming the 90 days horizon Scandinavian Tobacco is expected to generate 3.9 times less return on investment than Sphere Entertainment. But when comparing it to its historical volatility, Scandinavian Tobacco Group is 1.99 times less risky than Sphere Entertainment. It trades about 0.03 of its potential returns per unit of risk. Sphere Entertainment Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,068 in Sphere Entertainment Co on September 19, 2024 and sell it today you would earn a total of 1,733 from holding Sphere Entertainment Co or generate 83.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. Sphere Entertainment Co
Performance |
| Timeline |
| Scandinavian Tobacco |
| Sphere Entertainment |
Scandinavian Tobacco and Sphere Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and Sphere Entertainment
The main advantage of trading using opposite Scandinavian Tobacco and Sphere Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, Sphere Entertainment 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 Sphere Entertainment will offset losses from the drop in Sphere Entertainment's long position.| Scandinavian Tobacco vs. Imperial Brands PLC | Scandinavian Tobacco vs. RLX Technology | Scandinavian Tobacco vs. British American Tobacco | Scandinavian Tobacco vs. Turning Point Brands |
| Sphere Entertainment vs. Liberty Media | Sphere Entertainment vs. News Corp B | Sphere Entertainment vs. News Corp A |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |