Correlation Between Advantage Solutions and Netflix
Can any of the company-specific risk be diversified away by investing in both Advantage Solutions 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 Advantage Solutions and Netflix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advantage Solutions and Netflix, you can compare the effects of market volatilities on Advantage Solutions 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 Advantage Solutions with a short position of Netflix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advantage Solutions and Netflix.
Diversification Opportunities for Advantage Solutions and Netflix
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Advantage and Netflix is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Advantage Solutions and Netflix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netflix and Advantage Solutions 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 Advantage Solutions 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 Advantage Solutions i.e., Advantage Solutions and Netflix go up and down completely randomly.
Pair Corralation between Advantage Solutions and Netflix
Considering the 90-day investment horizon Advantage Solutions is expected to generate 1.41 times less return on investment than Netflix. In addition to that, Advantage Solutions is 1.75 times more volatile than Netflix. It trades about 0.04 of its total potential returns per unit of risk. Netflix is currently generating about 0.11 per unit of volatility. If you would invest 31,259 in Netflix on August 24, 2024 and sell it today you would earn a total of 58,489 from holding Netflix or generate 187.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advantage Solutions vs. Netflix
Performance |
| Timeline |
| Advantage Solutions |
| Netflix |
Advantage Solutions and Netflix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advantage Solutions and Netflix
The main advantage of trading using opposite Advantage Solutions and Netflix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advantage Solutions 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.The idea behind Advantage Solutions and Netflix 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.| 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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