Correlation Between Sphere Entertainment and Software Acquisition
Can any of the company-specific risk be diversified away by investing in both Sphere Entertainment and Software Acquisition 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 Software Acquisition 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 Software Acquisition Group, you can compare the effects of market volatilities on Sphere Entertainment and Software Acquisition 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 Software Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sphere Entertainment and Software Acquisition.
Diversification Opportunities for Sphere Entertainment and Software Acquisition
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sphere and Software is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and Software Acquisition Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Software Acquisition 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 Software Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Software Acquisition has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and Software Acquisition go up and down completely randomly.
Pair Corralation between Sphere Entertainment and Software Acquisition
Given the investment horizon of 90 days Sphere Entertainment is expected to generate 2.69 times less return on investment than Software Acquisition. But when comparing it to its historical volatility, Sphere Entertainment Co is 8.25 times less risky than Software Acquisition. It trades about 0.29 of its potential returns per unit of risk. Software Acquisition Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1.42 in Software Acquisition Group on April 17, 2025 and sell it today you would lose (0.19) from holding Software Acquisition Group or give up 13.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 50.0% |
| Values | Daily Returns |
Sphere Entertainment Co vs. Software Acquisition Group
Performance |
| Timeline |
| Sphere Entertainment |
| Software Acquisition |
Risk-Adjusted Performance
OK
Weak | Strong |
Sphere Entertainment and Software Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sphere Entertainment and Software Acquisition
The main advantage of trading using opposite Sphere Entertainment and Software Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sphere Entertainment position performs unexpectedly, Software Acquisition 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 Software Acquisition will offset losses from the drop in Software Acquisition's long position.| Sphere Entertainment vs. Evertz Technologies Limited | Sphere Entertainment vs. Zhihu Inc ADR | Sphere Entertainment vs. Allient | Sphere Entertainment vs. Weibo Corp |
| Software Acquisition vs. Liberty Media | Software Acquisition vs. Warner Music Group | Software Acquisition vs. Madison Square Garden | Software Acquisition 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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