Correlation Between Sirius XM and Paramount Global

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

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

Diversification Opportunities for Sirius XM and Paramount Global

-0.11

Correlation Coefficient

Sirius XM  Paramount Global

Good diversification

The 3 months correlation between Sirius and Paramount is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Sirius XM Holding and Paramount Global Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paramount Global Class and Sirius XM 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 Sirius XM Holding 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 Class has no effect on the direction of Sirius XM i.e., Sirius XM and Paramount Global go up and down completely randomly.

Pair Corralation between Sirius XM and Paramount Global

Given the investment horizon of 90 days Sirius XM Holding is expected to under-perform the Paramount Global. But the stock apears to be less risky and, when comparing its historical volatility, Sirius XM Holding is 2.04 times less risky than Paramount Global. The stock trades about -0.11 of its potential returns per unit of risk. The Paramount Global Class is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,106  in Paramount Global Class on February 8, 2024 and sell it today you would earn a total of  183.00  from holding Paramount Global Class or generate 16.55% return on investment over 90 days.

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

Sirius XM Holding  vs.  Paramount Global Class

Sirius XM Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sirius XM Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Paramount Global Class

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Paramount Global Class are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Paramount Global may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Sirius XM and Paramount Global

The main advantage of trading using opposite Sirius XM and Paramount Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sirius XM 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 Sirius XM Holding and Paramount Global Class 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.