Correlation Between MAHLE Metal and Paramount Global
Can any of the company-specific risk be diversified away by investing in both MAHLE Metal 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 MAHLE Metal and Paramount Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MAHLE Metal Leve and Paramount Global, you can compare the effects of market volatilities on MAHLE Metal 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 MAHLE Metal with a short position of Paramount Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAHLE Metal and Paramount Global.
Diversification Opportunities for MAHLE Metal and Paramount Global
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between MAHLE and Paramount is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding MAHLE Metal Leve and Paramount Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paramount Global and MAHLE Metal 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 MAHLE Metal Leve 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 has no effect on the direction of MAHLE Metal i.e., MAHLE Metal and Paramount Global go up and down completely randomly.
Pair Corralation between MAHLE Metal and Paramount Global
Assuming the 90 days trading horizon MAHLE Metal Leve is expected to under-perform the Paramount Global. But the stock apears to be less risky and, when comparing its historical volatility, MAHLE Metal Leve is 1.44 times less risky than Paramount Global. The stock trades about -0.01 of its potential returns per unit of risk. The Paramount Global is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 7,535 in Paramount Global on September 12, 2024 and sell it today you would lose (829.00) from holding Paramount Global or give up 11.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.87% |
| Values | Daily Returns |
MAHLE Metal Leve vs. Paramount Global
Performance |
| Timeline |
| MAHLE Metal Leve |
| Paramount Global |
MAHLE Metal and Paramount Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAHLE Metal and Paramount Global
The main advantage of trading using opposite MAHLE Metal and Paramount Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAHLE Metal 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.| MAHLE Metal vs. Tupy SA | MAHLE Metal vs. Engie Brasil Energia | MAHLE Metal vs. Grendene SA | MAHLE Metal vs. M Dias Branco |
| Paramount Global vs. MAHLE Metal Leve | Paramount Global vs. American Airlines Group | Paramount Global vs. United Airlines Holdings | Paramount Global vs. Tyson Foods |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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