Correlation Between Netflix and Grupo Posadas

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Can any of the company-specific risk be diversified away by investing in both Netflix and Grupo Posadas 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 Grupo Posadas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and Grupo Posadas SAB, you can compare the effects of market volatilities on Netflix and Grupo Posadas 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 Grupo Posadas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Grupo Posadas.

Diversification Opportunities for Netflix and Grupo Posadas

-0.89
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Netflix and Grupo is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Grupo Posadas SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Posadas SAB 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 Grupo Posadas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Posadas SAB has no effect on the direction of Netflix i.e., Netflix and Grupo Posadas go up and down completely randomly.

Pair Corralation between Netflix and Grupo Posadas

Assuming the 90 days trading horizon Netflix is expected to generate 2.02 times more return on investment than Grupo Posadas. However, Netflix is 2.02 times more volatile than Grupo Posadas SAB. It trades about 0.11 of its potential returns per unit of risk. Grupo Posadas SAB is currently generating about -0.02 per unit of risk. If you would invest  572,388  in Netflix on September 5, 2024 and sell it today you would earn a total of  1,255,912  from holding Netflix or generate 219.42% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy99.8%
ValuesDaily Returns

Netflix  vs.  Grupo Posadas SAB

 Performance 
       Timeline  
Netflix 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Netflix are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Netflix showed solid returns over the last few months and may actually be approaching a breakup point.
Grupo Posadas SAB 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Grupo Posadas SAB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Netflix and Grupo Posadas Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Netflix and Grupo Posadas

The main advantage of trading using opposite Netflix and Grupo Posadas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, Grupo Posadas 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 Grupo Posadas will offset losses from the drop in Grupo Posadas' long position.
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The idea behind Netflix and Grupo Posadas SAB 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.
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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