Correlation Between Netflix and IShares Emerging
Can any of the company-specific risk be diversified away by investing in both Netflix and IShares Emerging 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 IShares Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and iShares Emerging Markets, you can compare the effects of market volatilities on Netflix and IShares Emerging 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 IShares Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and IShares Emerging.
Diversification Opportunities for Netflix and IShares Emerging
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Netflix and IShares is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and iShares Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Emerging Markets 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 IShares Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Emerging Markets has no effect on the direction of Netflix i.e., Netflix and IShares Emerging go up and down completely randomly.
Pair Corralation between Netflix and IShares Emerging
Given the investment horizon of 90 days Netflix is expected to generate 1.45 times more return on investment than IShares Emerging. However, Netflix is 1.45 times more volatile than iShares Emerging Markets. It trades about 0.15 of its potential returns per unit of risk. iShares Emerging Markets is currently generating about -0.02 per unit of risk. If you would invest 65,027 in Netflix on September 3, 2024 and sell it today you would earn a total of 23,654 from holding Netflix or generate 36.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Netflix vs. iShares Emerging Markets
Performance |
| Timeline |
| Netflix |
| iShares Emerging Markets |
Netflix and IShares Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and IShares Emerging
The main advantage of trading using opposite Netflix and IShares Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, IShares Emerging 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 IShares Emerging will offset losses from the drop in IShares Emerging's long position.| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
| IShares Emerging vs. iShares Global Infrastructure | IShares Emerging vs. iShares MSCI Emerging | IShares Emerging vs. iShares MSCI New | IShares Emerging vs. iShares International Developed |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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