Correlation Between ViacomCBS and Grupo Media

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

By analyzing existing cross correlation between ViacomCBS and Grupo Media Capital, you can compare the effects of market volatilities on ViacomCBS and Grupo Media 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 ViacomCBS with a short position of Grupo Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of ViacomCBS and Grupo Media.

Diversification Opportunities for ViacomCBS and Grupo Media

0.45

Correlation Coefficient

ViacomCBS  Grupo Media

Very weak diversification

The 3 months correlation between ViacomCBS and Grupo is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding ViacomCBS and Grupo Media Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Media Capital and ViacomCBS 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 ViacomCBS are associated (or correlated) with Grupo Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Media Capital has no effect on the direction of ViacomCBS i.e., ViacomCBS and Grupo Media go up and down completely randomly.

Pair Corralation between ViacomCBS and Grupo Media

Assuming the 90 days trading horizon ViacomCBS is expected to under-perform the Grupo Media. In addition to that, ViacomCBS is 5.05 times more volatile than Grupo Media Capital. It trades about -0.03 of its total potential returns per unit of risk. Grupo Media Capital is currently generating about -0.01 per unit of volatility. If you would invest  111.00  in Grupo Media Capital on October 23, 2024 and sell it today you would lose (4.00) from holding Grupo Media Capital or give up 3.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

ViacomCBS  vs.  Grupo Media Capital

ViacomCBS

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ViacomCBS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ViacomCBS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Grupo Media Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Media Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Grupo Media is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ViacomCBS and Grupo Media

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

The idea behind ViacomCBS and Grupo Media Capital 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .