Correlation Between Citigroup and Netflix
Can any of the company-specific risk be diversified away by investing in both Citigroup 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 Citigroup and Netflix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Netflix, you can compare the effects of market volatilities on Citigroup 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 Citigroup with a short position of Netflix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Netflix.
Diversification Opportunities for Citigroup and Netflix
Poor diversification
The 3 months correlation between Citigroup and Netflix is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Netflix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netflix and Citigroup 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 Citigroup 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 Citigroup i.e., Citigroup and Netflix go up and down completely randomly.
Pair Corralation between Citigroup and Netflix
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.61 times less return on investment than Netflix. In addition to that, Citigroup is 1.42 times more volatile than Netflix. It trades about 0.24 of its total potential returns per unit of risk. Netflix is currently generating about 0.55 per unit of volatility. If you would invest 69,650 in Netflix on August 25, 2024 and sell it today you would earn a total of 14,160 from holding Netflix or generate 20.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Netflix
Performance |
| Timeline |
| Citigroup |
| Netflix |
Citigroup and Netflix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Netflix
The main advantage of trading using opposite Citigroup and Netflix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup 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.| Citigroup vs. Toronto Dominion Bank | Citigroup vs. Royal Bank of | Citigroup vs. JPMorgan Chase Co | Citigroup vs. Nu Holdings |
| Netflix vs. INTERCONT HOTELS | Netflix vs. Electronic Arts | Netflix vs. Hyatt Hotels | Netflix vs. Wyndham Hotels Resorts |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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