Correlation Between Grupo Simec and Sphere Entertainment

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

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

Diversification Opportunities for Grupo Simec and Sphere Entertainment

0.5

Correlation Coefficient

Grupo Simec  Sphere Entertainment

Very weak diversification

The 3 months correlation between Grupo and Sphere is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Simec SAB and Sphere Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sphere Entertainment and Grupo Simec 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 Grupo Simec SAB 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 Grupo Simec i.e., Grupo Simec and Sphere Entertainment go up and down completely randomly.

Pair Corralation between Grupo Simec and Sphere Entertainment

Considering the 90-day investment horizon Grupo Simec SAB is expected to under-perform the Sphere Entertainment. In addition to that, Grupo Simec is 1.07 times more volatile than Sphere Entertainment Co. It trades about -0.04 of its total potential returns per unit of risk. Sphere Entertainment Co is currently generating about -0.04 per unit of volatility. If you would invest  4,177  in Sphere Entertainment Co on September 15, 2024 and sell it today you would lose (396.00) from holding Sphere Entertainment Co or give up 9.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	85.94%
Values	Daily Returns

Grupo Simec SAB  vs.  Sphere Entertainment Co

Grupo Simec SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Simec SAB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm 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 fragile 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 Grupo Simec and Sphere Entertainment

The main advantage of trading using opposite Grupo Simec and Sphere Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Simec 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 Grupo Simec SAB 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..