Correlation Between Paramount Global and Able View

Can any of the company-specific risk be diversified away by investing in both Paramount Global and Able View 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 Able View 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 Able View Global, you can compare the effects of market volatilities on Paramount Global and Able View 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 Able View. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paramount Global and Able View.

Diversification Opportunities for Paramount Global and Able View

-0.33

Correlation Coefficient

Paramount Global  Able View

Very good diversification

The 3 months correlation between Paramount and Able is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Paramount Global Class and Able View Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Able View Global 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 Able View. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Able View Global has no effect on the direction of Paramount Global i.e., Paramount Global and Able View go up and down completely randomly.

Pair Corralation between Paramount Global and Able View

Assuming the 90 days horizon Paramount Global is expected to generate 6.02 times less return on investment than Able View. But when comparing it to its historical volatility, Paramount Global Class is 4.83 times less risky than Able View. It trades about 0.06 of its potential returns per unit of risk. Able View Global is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  93.00  in Able View Global on October 23, 2024 and sell it today you would earn a total of  15.00  from holding Able View Global or generate 16.13% return on investment over 90 days.

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

Paramount Global Class  vs.  Able View Global

Paramount Global Class

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Paramount Global Class are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Paramount Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Able View Global

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Able View Global are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile essential indicators, Able View showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Paramount Global and Able View

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

The idea behind Paramount Global Class and Able View 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.