Correlation Between GMS and Sphere Entertainment

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

By analyzing existing cross correlation between GMS Inc and Sphere Entertainment Co, you can compare the effects of market volatilities on GMS 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 GMS with a short position of Sphere Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMS and Sphere Entertainment.

Diversification Opportunities for GMS and Sphere Entertainment

-0.23

Correlation Coefficient

GMS  Sphere Entertainment

Very good diversification

The 3 months correlation between GMS and Sphere is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding GMS Inc and Sphere Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sphere Entertainment and GMS 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 GMS Inc 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 GMS i.e., GMS and Sphere Entertainment go up and down completely randomly.

Pair Corralation between GMS and Sphere Entertainment

Considering the 90-day investment horizon GMS Inc is expected to generate 0.68 times more return on investment than Sphere Entertainment. However, GMS Inc is 1.46 times less risky than Sphere Entertainment. It trades about -0.02 of its potential returns per unit of risk. Sphere Entertainment Co is currently generating about -0.06 per unit of risk. If you would invest  9,201  in GMS Inc on September 19, 2024 and sell it today you would lose (300.00) from holding GMS Inc or give up 3.26% of portfolio value over 90 days.

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

GMS Inc  vs.  Sphere Entertainment Co

GMS Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GMS Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, GMS is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Sphere Entertainment

Risk-Adjusted Performance

0 of 100

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 latest conflicting performance, the Stock's technical indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with GMS and Sphere Entertainment

The main advantage of trading using opposite GMS and Sphere Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMS 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 GMS Inc 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.