Correlation Between Paramount Global and Stagwell
Can any of the company-specific risk be diversified away by investing in both Paramount Global and Stagwell 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 Stagwell 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 Stagwell, you can compare the effects of market volatilities on Paramount Global and Stagwell 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 Stagwell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paramount Global and Stagwell.
Diversification Opportunities for Paramount Global and Stagwell
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Paramount and Stagwell is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Paramount Global Class and Stagwell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stagwell 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 Stagwell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stagwell has no effect on the direction of Paramount Global i.e., Paramount Global and Stagwell go up and down completely randomly.
Pair Corralation between Paramount Global and Stagwell
Given the investment horizon of 90 days Paramount Global Class is expected to generate 0.84 times more return on investment than Stagwell. However, Paramount Global Class is 1.19 times less risky than Stagwell. It trades about 0.0 of its potential returns per unit of risk. Stagwell is currently generating about -0.03 per unit of risk. If you would invest 1,050 in Paramount Global Class on September 24, 2024 and sell it today you would lose (15.00) from holding Paramount Global Class or give up 1.43% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Paramount Global Class vs. Stagwell
Performance |
Timeline |
Paramount Global Class |
Stagwell |
Paramount Global and Stagwell Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Paramount Global and Stagwell
The main advantage of trading using opposite Paramount Global and Stagwell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paramount Global position performs unexpectedly, Stagwell 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 Stagwell will offset losses from the drop in Stagwell's long position.Paramount Global vs. Walt Disney | Paramount Global vs. Roku Inc | Paramount Global vs. Netflix | Paramount Global vs. AMC Entertainment Holdings |
Stagwell vs. Warner Bros Discovery | Stagwell vs. Paramount Global Class | Stagwell vs. Live Nation Entertainment | Stagwell vs. Nexstar Broadcasting Group |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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