Correlation Between Netflix and US Bancorp
Can any of the company-specific risk be diversified away by investing in both Netflix and US Bancorp 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 US Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and US Bancorp, you can compare the effects of market volatilities on Netflix and US Bancorp 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 US Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and US Bancorp.
Diversification Opportunities for Netflix and US Bancorp
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Netflix and USB is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and US Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Bancorp 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 US Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Bancorp has no effect on the direction of Netflix i.e., Netflix and US Bancorp go up and down completely randomly.
Pair Corralation between Netflix and US Bancorp
Assuming the 90 days trading horizon Netflix is expected to generate 1.61 times more return on investment than US Bancorp. However, Netflix is 1.61 times more volatile than US Bancorp. It trades about 0.28 of its potential returns per unit of risk. US Bancorp is currently generating about 0.13 per unit of risk. If you would invest 1,538,800 in Netflix on September 19, 2024 and sell it today you would earn a total of 327,370 from holding Netflix or generate 21.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Netflix vs. US Bancorp
Performance |
| Timeline |
| Netflix |
| US Bancorp |
Netflix and US Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and US Bancorp
The main advantage of trading using opposite Netflix and US Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, US Bancorp 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 US Bancorp will offset losses from the drop in US Bancorp's long position.| Netflix vs. Verizon Communications | Netflix vs. Capital One Financial | Netflix vs. DXC Technology | Netflix vs. Grupo Sports World |
| US Bancorp vs. Netflix | US Bancorp vs. Honeywell International | US Bancorp vs. The Goodyear Tire | US Bancorp vs. The Walt Disney |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |