Correlation Between Church Dwight and Sphere Entertainment

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Can any of the company-specific risk be diversified away by investing in both Church Dwight 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 Church Dwight and Sphere Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Church Dwight and Sphere Entertainment Co, you can compare the effects of market volatilities on Church Dwight 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 Church Dwight with a short position of Sphere Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Church Dwight and Sphere Entertainment.

Diversification Opportunities for Church Dwight and Sphere Entertainment

-0.24
  Correlation Coefficient

Very good diversification

The 3 months correlation between Church and Sphere is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Church Dwight and Sphere Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sphere Entertainment and Church Dwight 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 Church Dwight 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 Church Dwight i.e., Church Dwight and Sphere Entertainment go up and down completely randomly.

Pair Corralation between Church Dwight and Sphere Entertainment

Considering the 90-day investment horizon Church Dwight is expected to generate 0.28 times more return on investment than Sphere Entertainment. However, Church Dwight is 3.54 times less risky than Sphere Entertainment. It trades about 0.1 of its potential returns per unit of risk. Sphere Entertainment Co is currently generating about -0.16 per unit of risk. If you would invest  10,567  in Church Dwight on February 22, 2024 and sell it today you would earn a total of  139.00  from holding Church Dwight or generate 1.32% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Church Dwight  vs.  Sphere Entertainment Co

 Performance 
       Timeline  
Church Dwight 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Church Dwight are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical indicators, Church Dwight may actually be approaching a critical reversion point that can send shares even higher in June 2024.
Sphere Entertainment 

Risk-Adjusted Performance

0 of 100

 
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 latest stock price agitation, may contribute to short-term losses for the retail investors.

Church Dwight and Sphere Entertainment Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Church Dwight and Sphere Entertainment

The main advantage of trading using opposite Church Dwight and Sphere Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Church Dwight 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.
The idea behind Church Dwight and Sphere Entertainment Co 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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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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