Correlation Between Visa and Paramount Global

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

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

Diversification Opportunities for Visa and Paramount Global

-0.2

Correlation Coefficient

Visa  Paramount Global

Good diversification

The 3 months correlation between Visa and Paramount is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A 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 Visa 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 Visa Class A 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 Visa i.e., Visa and Paramount Global go up and down completely randomly.

Pair Corralation between Visa and Paramount Global

Taking into account the 90-day investment horizon Visa Class A is expected to under-perform the Paramount Global. But the stock apears to be less risky and, when comparing its historical volatility, Visa Class A is 1.08 times less risky than Paramount Global. The stock trades about -0.02 of its potential returns per unit of risk. The Paramount Global Class is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,120  in Paramount Global Class on May 5, 2025 and sell it today you would earn a total of  181.00  from holding Paramount Global Class or generate 16.16% return on investment over 90 days.

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

Visa Class A  vs.  Paramount Global Class

Visa Class A

Risk-Adjusted Performance

Very Weak

Over the last 90 days Visa Class A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Visa is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Paramount Global Class

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Paramount Global Class are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Paramount Global sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Paramount Global

The main advantage of trading using opposite Visa and Paramount Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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 Visa Class A 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.