Correlation Between Sphere 3D and Enlivex Therapeutics

Can any of the company-specific risk be diversified away by investing in both Sphere 3D and Enlivex Therapeutics 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 3D and Enlivex Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sphere 3D Corp and Enlivex Therapeutics, you can compare the effects of market volatilities on Sphere 3D and Enlivex Therapeutics 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 3D with a short position of Enlivex Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sphere 3D and Enlivex Therapeutics.

Diversification Opportunities for Sphere 3D and Enlivex Therapeutics

-0.64

Correlation Coefficient

Sphere 3D  Enlivex Therapeutics

Excellent diversification

The 3 months correlation between Sphere and Enlivex is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Sphere 3D Corp and Enlivex Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enlivex Therapeutics and Sphere 3D 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 3D Corp are associated (or correlated) with Enlivex Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enlivex Therapeutics has no effect on the direction of Sphere 3D i.e., Sphere 3D and Enlivex Therapeutics go up and down completely randomly.

Pair Corralation between Sphere 3D and Enlivex Therapeutics

Considering the 90-day investment horizon Sphere 3D Corp is expected to generate 1.32 times more return on investment than Enlivex Therapeutics. However, Sphere 3D is 1.32 times more volatile than Enlivex Therapeutics. It trades about 0.17 of its potential returns per unit of risk. Enlivex Therapeutics is currently generating about 0.03 per unit of risk. If you would invest  103.00  in Sphere 3D Corp on September 4, 2024 and sell it today you would earn a total of  32.00  from holding Sphere 3D Corp or generate 31.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Sphere 3D Corp  vs.  Enlivex Therapeutics

Sphere 3D Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sphere 3D Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Sphere 3D showed solid returns over the last few months and may actually be approaching a breakup point.

Enlivex Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enlivex Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable essential indicators, Enlivex Therapeutics is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Sphere 3D and Enlivex Therapeutics

The main advantage of trading using opposite Sphere 3D and Enlivex Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sphere 3D position performs unexpectedly, Enlivex Therapeutics 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 Enlivex Therapeutics will offset losses from the drop in Enlivex Therapeutics' long position.

The idea behind Sphere 3D Corp and Enlivex Therapeutics 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.