Correlation Between Nasdaq and Paramount Global

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

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

Diversification Opportunities for Nasdaq and Paramount Global

-0.66

Correlation Coefficient

Nasdaq  Paramount Global

Excellent diversification

The 3 months correlation between Nasdaq and Paramount is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Paramount Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paramount Global and Nasdaq 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 Nasdaq Inc are associated (or correlated) with Paramount Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paramount Global has no effect on the direction of Nasdaq i.e., Nasdaq and Paramount Global go up and down completely randomly.

Pair Corralation between Nasdaq and Paramount Global

If you would invest  7,738  in Nasdaq Inc on October 20, 2024 and sell it today you would earn a total of  145.00  from holding Nasdaq Inc or generate 1.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	5.0%
Values	Daily Returns

Nasdaq Inc  vs.  Paramount Global

Nasdaq Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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.

Pair Trading with Nasdaq and Paramount Global

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

The idea behind Nasdaq Inc and Paramount Global 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.