Correlation Between Netflix and Beijing Capital
Can any of the company-specific risk be diversified away by investing in both Netflix and Beijing Capital 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 Beijing Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and Beijing Capital International, you can compare the effects of market volatilities on Netflix and Beijing Capital 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 Beijing Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Beijing Capital.
Diversification Opportunities for Netflix and Beijing Capital
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Netflix and Beijing is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Beijing Capital International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Capital Inte 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 Beijing Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Capital Inte has no effect on the direction of Netflix i.e., Netflix and Beijing Capital go up and down completely randomly.
Pair Corralation between Netflix and Beijing Capital
Given the investment horizon of 90 days Netflix is expected to generate 0.31 times more return on investment than Beijing Capital. However, Netflix is 3.26 times less risky than Beijing Capital. It trades about 0.55 of its potential returns per unit of risk. Beijing Capital International is currently generating about -0.04 per unit of risk. If you would invest 75,551 in Netflix on September 3, 2024 and sell it today you would earn a total of 13,130 from holding Netflix or generate 17.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Netflix vs. Beijing Capital International
Performance |
| Timeline |
| Netflix |
| Beijing Capital Inte |
Netflix and Beijing Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and Beijing Capital
The main advantage of trading using opposite Netflix and Beijing Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, Beijing Capital 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 Beijing Capital will offset losses from the drop in Beijing Capital's long position.| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
| Beijing Capital vs. Aena SME SA | Beijing Capital vs. SPACE | Beijing Capital vs. Bayview Acquisition Corp | Beijing Capital vs. T Rowe Price |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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