Correlation Between Netflix and Cummins
Can any of the company-specific risk be diversified away by investing in both Netflix and Cummins 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 Cummins into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and Cummins, you can compare the effects of market volatilities on Netflix and Cummins 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 Cummins. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Cummins.
Diversification Opportunities for Netflix and Cummins
Almost no diversification
The 3 months correlation between Netflix and Cummins is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Cummins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cummins 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 Cummins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cummins has no effect on the direction of Netflix i.e., Netflix and Cummins go up and down completely randomly.
Pair Corralation between Netflix and Cummins
Given the investment horizon of 90 days Netflix is expected to generate 1.2 times more return on investment than Cummins. However, Netflix is 1.2 times more volatile than Cummins. It trades about 0.41 of its potential returns per unit of risk. Cummins is currently generating about 0.25 per unit of risk. If you would invest 81,950 in Netflix on September 13, 2024 and sell it today you would earn a total of 11,706 from holding Netflix or generate 14.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Netflix vs. Cummins
Performance |
| Timeline |
| Netflix |
| Cummins |
Netflix and Cummins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and Cummins
The main advantage of trading using opposite Netflix and Cummins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, Cummins 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 Cummins will offset losses from the drop in Cummins' long position.| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
| Cummins vs. PARKEN Sport Entertainment | Cummins vs. Compagnie Plastic Omnium | Cummins vs. Jacquet Metal Service | Cummins vs. Aluminum of |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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