Correlation Between Netflix and Tesla
Can any of the company-specific risk be diversified away by investing in both Netflix and Tesla 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 Tesla into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and Tesla Inc, you can compare the effects of market volatilities on Netflix and Tesla 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 Tesla. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Tesla.
Diversification Opportunities for Netflix and Tesla
Very good diversification
The 3 months correlation between Netflix and Tesla is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Tesla Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc 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 Tesla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tesla Inc has no effect on the direction of Netflix i.e., Netflix and Tesla go up and down completely randomly.
Pair Corralation between Netflix and Tesla
Assuming the 90 days trading horizon Netflix is expected to generate 0.63 times more return on investment than Tesla. However, Netflix is 1.58 times less risky than Tesla. It trades about 0.13 of its potential returns per unit of risk. Tesla Inc is currently generating about 0.05 per unit of risk. If you would invest 592,700 in Netflix on November 19, 2024 and sell it today you would earn a total of 1,554,300 from holding Netflix or generate 262.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Netflix vs. Tesla Inc
Performance |
| Timeline |
| Netflix |
| Tesla Inc |
Netflix and Tesla Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and Tesla
The main advantage of trading using opposite Netflix and Tesla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, Tesla 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 Tesla will offset losses from the drop in Tesla's long position.| Netflix vs. Salesforce, | Netflix vs. Monster Beverage Corp | Netflix vs. Cognizant Technology Solutions | Netflix vs. Verizon Communications |
| Tesla vs. Air Transport Services | Tesla vs. Steel Dynamics | Tesla vs. Verizon Communications | Tesla vs. Grupo Industrial Saltillo |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |