Correlation Between Archer Aviation and Netflix
Can any of the company-specific risk be diversified away by investing in both Archer Aviation and Netflix 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 Archer Aviation and Netflix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Archer Aviation and Netflix, you can compare the effects of market volatilities on Archer Aviation and Netflix 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 Archer Aviation with a short position of Netflix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Archer Aviation and Netflix.
Diversification Opportunities for Archer Aviation and Netflix
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Archer and Netflix is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Archer Aviation and Netflix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netflix and Archer Aviation 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 Archer Aviation are associated (or correlated) with Netflix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netflix has no effect on the direction of Archer Aviation i.e., Archer Aviation and Netflix go up and down completely randomly.
Pair Corralation between Archer Aviation and Netflix
Given the investment horizon of 90 days Archer Aviation is expected to generate 3.32 times less return on investment than Netflix. In addition to that, Archer Aviation is 2.32 times more volatile than Netflix. It trades about 0.02 of its total potential returns per unit of risk. Netflix is currently generating about 0.15 per unit of volatility. If you would invest 48,688 in Netflix on August 25, 2024 and sell it today you would earn a total of 41,091 from holding Netflix or generate 84.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Archer Aviation vs. Netflix
Performance |
| Timeline |
| Archer Aviation |
| Netflix |
Archer Aviation and Netflix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Archer Aviation and Netflix
The main advantage of trading using opposite Archer Aviation and Netflix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Archer Aviation position performs unexpectedly, Netflix 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 Netflix will offset losses from the drop in Netflix's long position.| Archer Aviation vs. Vertical Aerospace | Archer Aviation vs. Ehang Holdings | Archer Aviation vs. Rocket Lab USA | Archer Aviation vs. Lilium NV |
| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
Check out your portfolio center.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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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