Correlation Between Sphere Entertainment and NeogamesSA
Can any of the company-specific risk be diversified away by investing in both Sphere Entertainment and NeogamesSA 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 NeogamesSA 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 NeogamesSA, you can compare the effects of market volatilities on Sphere Entertainment and NeogamesSA 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 NeogamesSA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sphere Entertainment and NeogamesSA.
Diversification Opportunities for Sphere Entertainment and NeogamesSA
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sphere and NeogamesSA is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and NeogamesSA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NeogamesSA 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 NeogamesSA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NeogamesSA has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and NeogamesSA go up and down completely randomly.
Pair Corralation between Sphere Entertainment and NeogamesSA
Given the investment horizon of 90 days Sphere Entertainment Co is expected to under-perform the NeogamesSA. In addition to that, Sphere Entertainment is 74.25 times more volatile than NeogamesSA. It trades about -0.16 of its total potential returns per unit of risk. NeogamesSA is currently generating about 0.45 per unit of volatility. If you would invest 2,943 in NeogamesSA on February 22, 2024 and sell it today you would earn a total of 2.00 from holding NeogamesSA or generate 0.07% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 22.73% |
Values | Daily Returns |
Sphere Entertainment Co vs. NeogamesSA
Performance |
Timeline |
Sphere Entertainment |
NeogamesSA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
Sphere Entertainment and NeogamesSA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sphere Entertainment and NeogamesSA
The main advantage of trading using opposite Sphere Entertainment and NeogamesSA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sphere Entertainment position performs unexpectedly, NeogamesSA 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 NeogamesSA will offset losses from the drop in NeogamesSA's long position.The idea behind Sphere Entertainment Co and NeogamesSA 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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