Correlation Between VIACOM and Mativ Holdings

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Can any of the company-specific risk be diversified away by investing in both VIACOM and Mativ Holdings 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 VIACOM and Mativ Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VIACOM INC NEW and Mativ Holdings, you can compare the effects of market volatilities on VIACOM and Mativ Holdings 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 VIACOM with a short position of Mativ Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of VIACOM and Mativ Holdings.

Diversification Opportunities for VIACOM and Mativ Holdings

-0.22
  Correlation Coefficient

Very good diversification

The 3 months correlation between VIACOM and Mativ is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding VIACOM INC NEW and Mativ Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mativ Holdings and VIACOM 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 VIACOM INC NEW are associated (or correlated) with Mativ Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mativ Holdings has no effect on the direction of VIACOM i.e., VIACOM and Mativ Holdings go up and down completely randomly.

Pair Corralation between VIACOM and Mativ Holdings

Assuming the 90 days trading horizon VIACOM INC NEW is expected to generate 1.28 times more return on investment than Mativ Holdings. However, VIACOM is 1.28 times more volatile than Mativ Holdings. It trades about 0.24 of its potential returns per unit of risk. Mativ Holdings is currently generating about -0.08 per unit of risk. If you would invest  6,625  in VIACOM INC NEW on August 27, 2024 and sell it today you would earn a total of  750.00  from holding VIACOM INC NEW or generate 11.32% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy33.33%
ValuesDaily Returns

VIACOM INC NEW  vs.  Mativ Holdings

 Performance 
       Timeline  
VIACOM INC NEW 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in VIACOM INC NEW are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, VIACOM sustained solid returns over the last few months and may actually be approaching a breakup point.
Mativ Holdings 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Mativ Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in December 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

VIACOM and Mativ Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with VIACOM and Mativ Holdings

The main advantage of trading using opposite VIACOM and Mativ Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VIACOM position performs unexpectedly, Mativ Holdings 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 Mativ Holdings will offset losses from the drop in Mativ Holdings' long position.
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The idea behind VIACOM INC NEW and Mativ Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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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