Correlation Between Netflix and Metro AG
Can any of the company-specific risk be diversified away by investing in both Netflix and Metro AG 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 Metro AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and Metro AG, you can compare the effects of market volatilities on Netflix and Metro AG 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 Metro AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Metro AG.
Diversification Opportunities for Netflix and Metro AG
Very good diversification
The 3 months correlation between Netflix and Metro is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Metro AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro AG 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 Metro AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro AG has no effect on the direction of Netflix i.e., Netflix and Metro AG go up and down completely randomly.
Pair Corralation between Netflix and Metro AG
Given the investment horizon of 90 days Netflix is expected to generate 0.66 times more return on investment than Metro AG. However, Netflix is 1.52 times less risky than Metro AG. It trades about 0.24 of its potential returns per unit of risk. Metro AG is currently generating about 0.02 per unit of risk. If you would invest 68,680 in Netflix on September 12, 2024 and sell it today you would earn a total of 22,655 from holding Netflix or generate 32.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Netflix vs. Metro AG
Performance |
| Timeline |
| Netflix |
| Metro AG |
Netflix and Metro AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and Metro AG
The main advantage of trading using opposite Netflix and Metro AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, Metro AG 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 Metro AG will offset losses from the drop in Metro AG's long position.| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
| Metro AG vs. Superior Plus Corp | Metro AG vs. SIVERS SEMICONDUCTORS AB | Metro AG vs. NorAm Drilling AS | Metro AG vs. BANK HANDLOWY |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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