Correlation Between Entravision Communications and Netflix
Can any of the company-specific risk be diversified away by investing in both Entravision Communications 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 Entravision Communications and Netflix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Entravision Communications and Netflix, you can compare the effects of market volatilities on Entravision Communications 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 Entravision Communications with a short position of Netflix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entravision Communications and Netflix.
Diversification Opportunities for Entravision Communications and Netflix
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Entravision and Netflix is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Entravision Communications and Netflix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netflix and Entravision Communications 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 Entravision Communications 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 Entravision Communications i.e., Entravision Communications and Netflix go up and down completely randomly.
Pair Corralation between Entravision Communications and Netflix
Considering the 90-day investment horizon Entravision Communications is expected to under-perform the Netflix. In addition to that, Entravision Communications is 1.17 times more volatile than Netflix. It trades about -0.15 of its total potential returns per unit of risk. Netflix is currently generating about 0.45 per unit of volatility. If you would invest 85,810 in Netflix on November 18, 2024 and sell it today you would earn a total of 20,050 from holding Netflix or generate 23.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Entravision Communications vs. Netflix
Performance |
| Timeline |
| Entravision Communications |
| Netflix |
Entravision Communications and Netflix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Entravision Communications and Netflix
The main advantage of trading using opposite Entravision Communications and Netflix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entravision Communications 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.| Entravision Communications vs. Marchex | Entravision Communications vs. Direct Digital Holdings | Entravision Communications vs. Cimpress NV | Entravision Communications vs. Townsquare Media |
| 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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