Correlation Between SVB Financial and Paramount Global

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

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

Diversification Opportunities for SVB Financial and Paramount Global

0.0

Correlation Coefficient

SVB Financial  Paramount Global

Pay attention - limited upside

The 3 months correlation between SVB and Paramount is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SVB Financial Group and Paramount Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paramount Global and SVB Financial 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 SVB Financial Group 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 SVB Financial i.e., SVB Financial and Paramount Global go up and down completely randomly.

Pair Corralation between SVB Financial and Paramount Global

If you would invest  6,474  in Paramount Global on September 15, 2024 and sell it today you would earn a total of  610.00  from holding Paramount Global or generate 9.42% return on investment over 90 days.

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

SVB Financial Group  vs.  Paramount Global

SVB Financial Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SVB Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, SVB Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Paramount Global

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Paramount Global are ranked lower than 12 (%) 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.

Pair Trading with SVB Financial and Paramount Global

The main advantage of trading using opposite SVB Financial and Paramount Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SVB Financial 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 SVB Financial Group 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.