Correlation Between Sphere Entertainment and NOVARTIS

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

Diversification Opportunities for Sphere Entertainment and NOVARTIS

0.45

Correlation Coefficient

Sphere Entertainment  NOVARTIS

Very weak diversification

The 3 months correlation between Sphere and NOVARTIS is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and NOVARTIS CAPITAL P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOVARTIS CAPITAL P 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 NOVARTIS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOVARTIS CAPITAL P has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and NOVARTIS go up and down completely randomly.

Pair Corralation between Sphere Entertainment and NOVARTIS

Given the investment horizon of 90 days Sphere Entertainment Co is expected to under-perform the NOVARTIS. In addition to that, Sphere Entertainment is 7.57 times more volatile than NOVARTIS CAPITAL P. It trades about -0.04 of its total potential returns per unit of risk. NOVARTIS CAPITAL P is currently generating about -0.19 per unit of volatility. If you would invest  9,615  in NOVARTIS CAPITAL P on September 14, 2024 and sell it today you would lose (394.00) from holding NOVARTIS CAPITAL P or give up 4.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.88%
Values	Daily Returns

Sphere Entertainment Co  vs.  NOVARTIS CAPITAL P

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.

NOVARTIS CAPITAL P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NOVARTIS CAPITAL P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NOVARTIS is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sphere Entertainment and NOVARTIS

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

The idea behind Sphere Entertainment Co and NOVARTIS CAPITAL P 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.