Correlation Between Netflix and Masco Corp
Can any of the company-specific risk be diversified away by investing in both Netflix and Masco Corp 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 Masco Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and Masco Corp, you can compare the effects of market volatilities on Netflix and Masco Corp 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 Masco Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Masco Corp.
Diversification Opportunities for Netflix and Masco Corp
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Netflix and Masco is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Masco Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Masco 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 Masco Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Masco Corp has no effect on the direction of Netflix i.e., Netflix and Masco Corp go up and down completely randomly.
Pair Corralation between Netflix and Masco Corp
Given the investment horizon of 90 days Netflix is expected to generate 1.08 times more return on investment than Masco Corp. However, Netflix is 1.08 times more volatile than Masco Corp. It trades about 0.45 of its potential returns per unit of risk. Masco Corp is currently generating about -0.07 per unit of risk. If you would invest 80,544 in Netflix on September 12, 2024 and sell it today you would earn a total of 13,112 from holding Netflix or generate 16.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Netflix vs. Masco Corp
Performance |
| Timeline |
| Netflix |
| Masco Corp |
Netflix and Masco Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and Masco Corp
The main advantage of trading using opposite Netflix and Masco Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, Masco Corp 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 Masco Corp will offset losses from the drop in Masco Corp's long position.| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
| Masco Corp vs. Komercni Banka | Masco Corp vs. Ally Financial | Masco Corp vs. Take Two Interactive Software | Masco Corp vs. MT Bank Corp |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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