Correlation Between Paramount Global and Marcus
Can any of the company-specific risk be diversified away by investing in both Paramount Global and Marcus 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 Marcus 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 Marcus, you can compare the effects of market volatilities on Paramount Global and Marcus 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 Marcus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paramount Global and Marcus.
Diversification Opportunities for Paramount Global and Marcus
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Paramount and Marcus is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Paramount Global Class and Marcus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marcus 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 Marcus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marcus has no effect on the direction of Paramount Global i.e., Paramount Global and Marcus go up and down completely randomly.
Pair Corralation between Paramount Global and Marcus
Assuming the 90 days horizon Paramount Global is expected to generate 6.53 times less return on investment than Marcus. But when comparing it to its historical volatility, Paramount Global Class is 1.95 times less risky than Marcus. It trades about 0.13 of its potential returns per unit of risk. Marcus is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest 1,681 in Marcus on August 27, 2024 and sell it today you would earn a total of 522.00 from holding Marcus or generate 31.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Paramount Global Class vs. Marcus
Performance |
| Timeline |
| Paramount Global Class |
| Marcus |
Paramount Global and Marcus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Paramount Global and Marcus
The main advantage of trading using opposite Paramount Global and Marcus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paramount Global position performs unexpectedly, Marcus 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 Marcus will offset losses from the drop in Marcus' long position.| Paramount Global vs. Fox Corp Class | Paramount Global vs. News Corp A | Paramount Global vs. News Corp B | Paramount Global vs. Liberty Media |
| Marcus vs. News Corp A | Marcus vs. Liberty Media | Marcus vs. Warner Music Group | Marcus vs. Fox Corp 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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