Correlation Between Netflix and Highlight Tech
Can any of the company-specific risk be diversified away by investing in both Netflix and Highlight Tech 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 Highlight Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and Highlight Tech, you can compare the effects of market volatilities on Netflix and Highlight Tech 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 Highlight Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Highlight Tech.
Diversification Opportunities for Netflix and Highlight Tech
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Netflix and Highlight is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Highlight Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highlight Tech 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 Highlight Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highlight Tech has no effect on the direction of Netflix i.e., Netflix and Highlight Tech go up and down completely randomly.
Pair Corralation between Netflix and Highlight Tech
Given the investment horizon of 90 days Netflix is expected to generate 1.55 times more return on investment than Highlight Tech. However, Netflix is 1.55 times more volatile than Highlight Tech. It trades about 0.57 of its potential returns per unit of risk. Highlight Tech is currently generating about -0.49 per unit of risk. If you would invest 75,551 in Netflix on September 4, 2024 and sell it today you would earn a total of 14,223 from holding Netflix or generate 18.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Netflix vs. Highlight Tech
Performance |
| Timeline |
| Netflix |
| Highlight Tech |
Netflix and Highlight Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and Highlight Tech
The main advantage of trading using opposite Netflix and Highlight Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, Highlight Tech 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 Highlight Tech will offset losses from the drop in Highlight Tech's long position.| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
| Highlight Tech vs. WiseChip Semiconductor | Highlight Tech vs. Novatek Microelectronics Corp | Highlight Tech vs. Leader Electronics | Highlight Tech vs. Information Technology Total |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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