Correlation Between Barnes and Netflix
Can any of the company-specific risk be diversified away by investing in both Barnes 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 Barnes and Netflix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barnes Group and Netflix, you can compare the effects of market volatilities on Barnes 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 Barnes with a short position of Netflix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barnes and Netflix.
Diversification Opportunities for Barnes and Netflix
Poor diversification
The 3 months correlation between Barnes and Netflix is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Group and Netflix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netflix and Barnes 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 Barnes Group 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 Barnes i.e., Barnes and Netflix go up and down completely randomly.
Pair Corralation between Barnes and Netflix
Taking into account the 90-day investment horizon Barnes is expected to generate 90.06 times less return on investment than Netflix. But when comparing it to its historical volatility, Barnes Group is 14.25 times less risky than Netflix. It trades about 0.08 of its potential returns per unit of risk. Netflix is currently generating about 0.49 of returns per unit of risk over similar time horizon. If you would invest 75,374 in Netflix on August 31, 2024 and sell it today you would earn a total of 12,360 from holding Netflix or generate 16.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barnes Group vs. Netflix
Performance |
| Timeline |
| Barnes Group |
| Netflix |
Barnes and Netflix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barnes and Netflix
The main advantage of trading using opposite Barnes and Netflix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnes 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.| Barnes vs. Helios Technologies | Barnes vs. Enpro Industries | Barnes vs. Omega Flex | Barnes vs. Luxfer Holdings PLC |
| 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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