Correlation Between Software Acquisition and Sphere Entertainment

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

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

Diversification Opportunities for Software Acquisition and Sphere Entertainment

0.28

Correlation Coefficient

Software Acquisition  Sphere Entertainment

Modest diversification

The 3 months correlation between Software and Sphere is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Software Acquisition Group and Sphere Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sphere Entertainment and Software Acquisition 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 Software Acquisition Group 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 Software Acquisition i.e., Software Acquisition and Sphere Entertainment go up and down completely randomly.

Pair Corralation between Software Acquisition and Sphere Entertainment

Assuming the 90 days horizon Software Acquisition Group is expected to generate 11.01 times more return on investment than Sphere Entertainment. However, Software Acquisition is 11.01 times more volatile than Sphere Entertainment Co. It trades about 0.16 of its potential returns per unit of risk. Sphere Entertainment Co is currently generating about 0.08 per unit of risk. If you would invest  1.78  in Software Acquisition Group on May 26, 2025 and sell it today you would earn a total of  0.94  from holding Software Acquisition Group or generate 52.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	52.38%
Values	Daily Returns

Software Acquisition Group  vs.  Sphere Entertainment Co

Software Acquisition

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Software Acquisition Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical and fundamental indicators, Software Acquisition showed solid returns over the last few months and may actually be approaching a breakup point.

Sphere Entertainment

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Sphere Entertainment Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting technical indicators, Sphere Entertainment reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Software Acquisition and Sphere Entertainment

The main advantage of trading using opposite Software Acquisition and Sphere Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Software Acquisition 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 Software Acquisition Group 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.