Correlation Between Netflix and Superior Plus
Can any of the company-specific risk be diversified away by investing in both Netflix and Superior Plus 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 Netflix and Superior Plus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and Superior Plus Corp, you can compare the effects of market volatilities on Netflix and Superior Plus 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 Netflix with a short position of Superior Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Superior Plus.
Diversification Opportunities for Netflix and Superior Plus
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Netflix and Superior is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Superior Plus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Plus Corp and Netflix 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 Netflix are associated (or correlated) with Superior Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Plus Corp has no effect on the direction of Netflix i.e., Netflix and Superior Plus go up and down completely randomly.
Pair Corralation between Netflix and Superior Plus
Assuming the 90 days horizon Netflix is expected to generate 1.04 times more return on investment than Superior Plus. However, Netflix is 1.04 times more volatile than Superior Plus Corp. It trades about 0.1 of its potential returns per unit of risk. Superior Plus Corp is currently generating about -0.02 per unit of risk. If you would invest 30,675 in Netflix on September 3, 2024 and sell it today you would earn a total of 53,075 from holding Netflix or generate 173.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Netflix vs. Superior Plus Corp
Performance |
| Timeline |
| Netflix |
| Superior Plus Corp |
Netflix and Superior Plus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and Superior Plus
The main advantage of trading using opposite Netflix and Superior Plus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, Superior Plus 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 Superior Plus will offset losses from the drop in Superior Plus' long position.The idea behind Netflix and Superior Plus Corp 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.| Superior Plus vs. Collins Foods Limited | Superior Plus vs. Thai Beverage Public | Superior Plus vs. ADRIATIC METALS LS 013355 | Superior Plus vs. Lifeway Foods |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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