Correlation Between Sphere Entertainment and Old Dominion

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

Diversification Opportunities for Sphere Entertainment and Old Dominion

0.62

Correlation Coefficient

Sphere Entertainment  Old Dominion

Poor diversification

The 3 months correlation between Sphere and Old is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and Old Dominion Freight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Dominion Freight 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 Old Dominion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Dominion Freight has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and Old Dominion go up and down completely randomly.

Pair Corralation between Sphere Entertainment and Old Dominion

Given the investment horizon of 90 days Sphere Entertainment Co is expected to generate about the same return on investment as Old Dominion Freight. However, Sphere Entertainment is 1.5 times more volatile than Old Dominion Freight. It trades about 0.03 of its potential returns per unit of risk. Old Dominion Freight is currently producing about 0.04 per unit of risk. If you would invest  12,772  in Old Dominion Freight on February 21, 2024 and sell it today you would earn a total of  5,125  from holding Old Dominion Freight or generate 40.13% return on investment over 90 days.

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

Sphere Entertainment Co  vs.  Old Dominion Freight

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 weak 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.

Old Dominion Freight

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Old Dominion Freight has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in June 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Sphere Entertainment and Old Dominion

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

The idea behind Sphere Entertainment Co and Old Dominion Freight 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.