Correlation Between Paramount Global and American Picture

Can any of the company-specific risk be diversified away by investing in both Paramount Global and American Picture 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 American Picture into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Paramount Global and American Picture House, you can compare the effects of market volatilities on Paramount Global and American Picture 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 American Picture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paramount Global and American Picture.

Diversification Opportunities for Paramount Global and American Picture

-0.08

Correlation Coefficient

Paramount Global  American Picture

Good diversification

The 3 months correlation between Paramount and American is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Paramount Global and American Picture House in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Picture House 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 are associated (or correlated) with American Picture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Picture House has no effect on the direction of Paramount Global i.e., Paramount Global and American Picture go up and down completely randomly.

Pair Corralation between Paramount Global and American Picture

If you would invest  23.00  in American Picture House on September 21, 2024 and sell it today you would earn a total of  2.00  from holding American Picture House or generate 8.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.34%
Values	Daily Returns

Paramount Global  vs.  American Picture House

Paramount Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Paramount Global has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Paramount Global is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

American Picture House

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in American Picture House are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain technical indicators, American Picture may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Paramount Global and American Picture

The main advantage of trading using opposite Paramount Global and American Picture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paramount Global position performs unexpectedly, American Picture 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 American Picture will offset losses from the drop in American Picture's long position.

The idea behind Paramount Global and American Picture House 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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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.