Correlation Between Paramount Global and Liberty Media
Can any of the company-specific risk be diversified away by investing in both Paramount Global and Liberty Media 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 Paramount Global and Liberty Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Paramount Global Class and Liberty Media, you can compare the effects of market volatilities on Paramount Global and Liberty Media 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 Paramount Global with a short position of Liberty Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paramount Global and Liberty Media.
Diversification Opportunities for Paramount Global and Liberty Media
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Paramount and Liberty is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Paramount Global Class and Liberty Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Media and Paramount Global 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 Paramount Global Class are associated (or correlated) with Liberty Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Media has no effect on the direction of Paramount Global i.e., Paramount Global and Liberty Media go up and down completely randomly.
Pair Corralation between Paramount Global and Liberty Media
Given the investment horizon of 90 days Paramount Global Class is expected to generate 1.29 times more return on investment than Liberty Media. However, Paramount Global is 1.29 times more volatile than Liberty Media. It trades about 0.09 of its potential returns per unit of risk. Liberty Media is currently generating about 0.1 per unit of risk. If you would invest 1,043 in Paramount Global Class on August 27, 2024 and sell it today you would earn a total of 45.00 from holding Paramount Global Class or generate 4.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Paramount Global Class vs. Liberty Media
Performance |
| Timeline |
| Paramount Global Class |
| Liberty Media |
Paramount Global and Liberty Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Paramount Global and Liberty Media
The main advantage of trading using opposite Paramount Global and Liberty Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paramount Global position performs unexpectedly, Liberty Media 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 Liberty Media will offset losses from the drop in Liberty Media's long position.| Paramount Global vs. Walt Disney | Paramount Global vs. Roku Inc | Paramount Global vs. Netflix | Paramount Global vs. AMC Entertainment Holdings |
| Liberty Media vs. Atlanta Braves Holdings, | Liberty Media vs. Madison Square Garden | Liberty Media vs. News Corp B | Liberty Media vs. News Corp A |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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