Correlation Between Netflix and Eiffage SA
Can any of the company-specific risk be diversified away by investing in both Netflix and Eiffage SA 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 Eiffage SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and Eiffage SA ADR, you can compare the effects of market volatilities on Netflix and Eiffage SA 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 Eiffage SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Eiffage SA.
Diversification Opportunities for Netflix and Eiffage SA
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Netflix and Eiffage is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Eiffage SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eiffage SA ADR 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 Eiffage SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eiffage SA ADR has no effect on the direction of Netflix i.e., Netflix and Eiffage SA go up and down completely randomly.
Pair Corralation between Netflix and Eiffage SA
Given the investment horizon of 90 days Netflix is expected to generate 0.54 times more return on investment than Eiffage SA. However, Netflix is 1.84 times less risky than Eiffage SA. It trades about 0.57 of its potential returns per unit of risk. Eiffage SA ADR is currently generating about -0.12 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Netflix vs. Eiffage SA ADR
Performance |
| Timeline |
| Netflix |
| Eiffage SA ADR |
Netflix and Eiffage SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and Eiffage SA
The main advantage of trading using opposite Netflix and Eiffage SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, Eiffage SA 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 Eiffage SA will offset losses from the drop in Eiffage SA's long position.| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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