Correlation Between Paramount Global and Comcast

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

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

Diversification Opportunities for Paramount Global and Comcast

0.69

Correlation Coefficient

Paramount Global  Comcast

Poor diversification

The 3 months correlation between Paramount and Comcast is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Paramount Global and Comcast in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comcast 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 Comcast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comcast has no effect on the direction of Paramount Global i.e., Paramount Global and Comcast go up and down completely randomly.

Pair Corralation between Paramount Global and Comcast

Assuming the 90 days trading horizon Paramount Global is expected to generate 1.22 times more return on investment than Comcast. However, Paramount Global is 1.22 times more volatile than Comcast. It trades about 0.08 of its potential returns per unit of risk. Comcast is currently generating about 0.06 per unit of risk. If you would invest  5,793  in Paramount Global on September 26, 2024 and sell it today you would earn a total of  645.00  from holding Paramount Global or generate 11.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Paramount Global  vs.  Comcast

Paramount Global

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Paramount Global are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Paramount Global sustained solid returns over the last few months and may actually be approaching a breakup point.

Comcast

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Comcast are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Comcast may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Paramount Global and Comcast

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

The idea behind Paramount Global and Comcast 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.

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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.