Correlation Between Sphere Entertainment and Knife River

Can any of the company-specific risk be diversified away by investing in both Sphere Entertainment and Knife River 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 Knife River 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 Knife River, you can compare the effects of market volatilities on Sphere Entertainment and Knife River 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 Knife River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sphere Entertainment and Knife River.

Diversification Opportunities for Sphere Entertainment and Knife River

-0.36

Correlation Coefficient

Sphere Entertainment  Knife River

Very good diversification

The 3 months correlation between Sphere and Knife is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and Knife River in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knife River 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 Knife River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knife River has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and Knife River go up and down completely randomly.

Pair Corralation between Sphere Entertainment and Knife River

Given the investment horizon of 90 days Sphere Entertainment Co is expected to under-perform the Knife River. In addition to that, Sphere Entertainment is 1.27 times more volatile than Knife River. It trades about -0.04 of its total potential returns per unit of risk. Knife River is currently generating about 0.15 per unit of volatility. If you would invest  8,762  in Knife River on September 14, 2024 and sell it today you would earn a total of  1,811  from holding Knife River or generate 20.67% return on investment over 90 days.

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

Sphere Entertainment Co  vs.  Knife River

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.

Knife River

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Knife River are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Knife River reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sphere Entertainment and Knife River

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

The idea behind Sphere Entertainment Co and Knife River 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.