Correlation Between Netflix and Austin Engineering
Can any of the company-specific risk be diversified away by investing in both Netflix and Austin Engineering 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 Austin Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and Austin Engineering Limited, you can compare the effects of market volatilities on Netflix and Austin Engineering 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 Austin Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Austin Engineering.
Diversification Opportunities for Netflix and Austin Engineering
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Netflix and Austin is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Austin Engineering Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austin Engineering 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 Austin Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austin Engineering has no effect on the direction of Netflix i.e., Netflix and Austin Engineering go up and down completely randomly.
Pair Corralation between Netflix and Austin Engineering
Given the investment horizon of 90 days Netflix is expected to generate 0.48 times more return on investment than Austin Engineering. However, Netflix is 2.07 times less risky than Austin Engineering. It trades about 0.06 of its potential returns per unit of risk. Austin Engineering Limited is currently generating about -0.01 per unit of risk. If you would invest 82,396 in Netflix on January 14, 2025 and sell it today you would earn a total of 10,732 from holding Netflix or generate 13.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.23% |
| Values | Daily Returns |
Netflix vs. Austin Engineering Limited
Performance |
| Timeline |
| Netflix |
| Austin Engineering |
Netflix and Austin Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and Austin Engineering
The main advantage of trading using opposite Netflix and Austin Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, Austin Engineering 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 Austin Engineering will offset losses from the drop in Austin Engineering's long position.| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
| Austin Engineering vs. American Premium Water | Austin Engineering vs. AmeraMex International | Austin Engineering vs. Arts Way Manufacturing Co | Austin Engineering vs. Astec Industries |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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