Correlation Between Paramount Global and Warner Bros
Can any of the company-specific risk be diversified away by investing in both Paramount Global and Warner Bros 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 Warner Bros 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 Warner Bros Discovery, you can compare the effects of market volatilities on Paramount Global and Warner Bros 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 Warner Bros. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paramount Global and Warner Bros.
Diversification Opportunities for Paramount Global and Warner Bros
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Paramount and Warner is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Paramount Global Class and Warner Bros Discovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warner Bros Discovery 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 Warner Bros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warner Bros Discovery has no effect on the direction of Paramount Global i.e., Paramount Global and Warner Bros go up and down completely randomly.
Pair Corralation between Paramount Global and Warner Bros
Given the investment horizon of 90 days Paramount Global Class is expected to generate 0.86 times more return on investment than Warner Bros. However, Paramount Global Class is 1.16 times less risky than Warner Bros. It trades about 0.29 of its potential returns per unit of risk. Warner Bros Discovery is currently generating about 0.22 per unit of risk. If you would invest 1,027 in Paramount Global Class on November 18, 2024 and sell it today you would earn a total of 103.00 from holding Paramount Global Class or generate 10.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Paramount Global Class vs. Warner Bros Discovery
Performance |
| Timeline |
| Paramount Global Class |
| Warner Bros Discovery |
Paramount Global and Warner Bros Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Paramount Global and Warner Bros
The main advantage of trading using opposite Paramount Global and Warner Bros positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paramount Global position performs unexpectedly, Warner Bros 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 Warner Bros will offset losses from the drop in Warner Bros' long position.| Paramount Global vs. Walt Disney | Paramount Global vs. Roku Inc | Paramount Global vs. Netflix | Paramount Global vs. AMC Entertainment Holdings |
| Warner Bros vs. Walt Disney | Warner Bros vs. Roku Inc | Warner Bros vs. Netflix | Warner Bros vs. Paramount Global Class |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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