Correlation Between Liberty Media and Paramount Global
Can any of the company-specific risk be diversified away by investing in both Liberty Media and Paramount Global 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 Liberty Media and Paramount Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Media and Paramount Global Class, you can compare the effects of market volatilities on Liberty Media and Paramount Global 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 Liberty Media with a short position of Paramount Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Media and Paramount Global.
Diversification Opportunities for Liberty Media and Paramount Global
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Liberty and Paramount is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Media and Paramount Global Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paramount Global Class and Liberty Media 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 Liberty Media are associated (or correlated) with Paramount Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paramount Global Class has no effect on the direction of Liberty Media i.e., Liberty Media and Paramount Global go up and down completely randomly.
Pair Corralation between Liberty Media and Paramount Global
Assuming the 90 days horizon Liberty Media is expected to generate 0.8 times more return on investment than Paramount Global. However, Liberty Media is 1.25 times less risky than Paramount Global. It trades about 0.21 of its potential returns per unit of risk. Paramount Global Class is currently generating about 0.03 per unit of risk. If you would invest 8,066 in Liberty Media on August 31, 2024 and sell it today you would earn a total of 807.00 from holding Liberty Media or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liberty Media vs. Paramount Global Class
Performance |
| Timeline |
| Liberty Media |
| Paramount Global Class |
Liberty Media and Paramount Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Media and Paramount Global
The main advantage of trading using opposite Liberty Media and Paramount Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Media position performs unexpectedly, Paramount Global 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 Paramount Global will offset losses from the drop in Paramount Global's long position.| Liberty Media vs. News Corp B | Liberty Media vs. Fox Corp Class | Liberty Media vs. AMC Networks | Liberty Media vs. Marcus |
| Paramount Global vs. News Corp B | Paramount Global vs. Fox Corp Class | Paramount Global vs. AMC Networks | Paramount Global vs. Marcus |
Check out your portfolio center.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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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