Correlation Between Netflix and Leverage Shares
Can any of the company-specific risk be diversified away by investing in both Netflix and Leverage Shares 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 Leverage Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and Leverage Shares 3x, you can compare the effects of market volatilities on Netflix and Leverage Shares 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 Leverage Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Leverage Shares.
Diversification Opportunities for Netflix and Leverage Shares
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Netflix and Leverage is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Leverage Shares 3x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leverage Shares 3x 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 Leverage Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leverage Shares 3x has no effect on the direction of Netflix i.e., Netflix and Leverage Shares go up and down completely randomly.
Pair Corralation between Netflix and Leverage Shares
Given the investment horizon of 90 days Netflix is expected to generate 9.02 times less return on investment than Leverage Shares. But when comparing it to its historical volatility, Netflix is 12.0 times less risky than Leverage Shares. It trades about 0.57 of its potential returns per unit of risk. Leverage Shares 3x is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest 12,874 in Leverage Shares 3x on September 4, 2024 and sell it today you would earn a total of 34,054 from holding Leverage Shares 3x or generate 264.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Netflix vs. Leverage Shares 3x
Performance |
| Timeline |
| Netflix |
| Leverage Shares 3x |
Netflix and Leverage Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and Leverage Shares
The main advantage of trading using opposite Netflix and Leverage Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, Leverage Shares 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 Leverage Shares will offset losses from the drop in Leverage Shares' long position.| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
| Leverage Shares vs. Vanguard SP 500 | Leverage Shares vs. SPDR Dow Jones | Leverage Shares vs. iShares Core MSCI | Leverage Shares vs. iShares SP 500 |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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