Correlation Between Hubbell and Paramount Global

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

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

Diversification Opportunities for Hubbell and Paramount Global

-0.91

Correlation Coefficient

Hubbell  Paramount Global

Pay attention - limited upside

The 3 months correlation between Hubbell and Paramount is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Hubbell and Paramount Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paramount Global and Hubbell 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 Hubbell 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 Hubbell i.e., Hubbell and Paramount Global go up and down completely randomly.

Pair Corralation between Hubbell and Paramount Global

Given the investment horizon of 90 days Hubbell is expected to generate 0.62 times more return on investment than Paramount Global. However, Hubbell is 1.62 times less risky than Paramount Global. It trades about 0.09 of its potential returns per unit of risk. Paramount Global is currently generating about -0.03 per unit of risk. If you would invest  18,784  in Hubbell on January 20, 2024 and sell it today you would earn a total of  20,019  from holding Hubbell or generate 106.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	97.18%
Values	Daily Returns

Hubbell  vs.  Paramount Global

Hubbell

Risk-Adjusted Performance

13 of 100

Good

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

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 weak performance in the last few months, the Preferred Stock's basic indicators remain relatively invariable which may send shares a bit higher in May 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Hubbell and Paramount Global

The main advantage of trading using opposite Hubbell and Paramount Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hubbell 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 Hubbell 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.