Correlation Between Netflix and Flutter Entertainment
Can any of the company-specific risk be diversified away by investing in both Netflix and Flutter Entertainment 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 Flutter Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and Flutter Entertainment plc, you can compare the effects of market volatilities on Netflix and Flutter Entertainment 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 Flutter Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Flutter Entertainment.
Diversification Opportunities for Netflix and Flutter Entertainment
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Netflix and Flutter is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Flutter Entertainment plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flutter Entertainment plc 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 Flutter Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flutter Entertainment plc has no effect on the direction of Netflix i.e., Netflix and Flutter Entertainment go up and down completely randomly.
Pair Corralation between Netflix and Flutter Entertainment
Given the investment horizon of 90 days Netflix is expected to generate 1.31 times less return on investment than Flutter Entertainment. But when comparing it to its historical volatility, Netflix is 1.28 times less risky than Flutter Entertainment. It trades about 0.15 of its potential returns per unit of risk. Flutter Entertainment plc is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 18,651 in Flutter Entertainment plc on September 3, 2024 and sell it today you would earn a total of 9,149 from holding Flutter Entertainment plc or generate 49.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Netflix vs. Flutter Entertainment plc
Performance |
| Timeline |
| Netflix |
| Flutter Entertainment plc |
Netflix and Flutter Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and Flutter Entertainment
The main advantage of trading using opposite Netflix and Flutter Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, Flutter Entertainment 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 Flutter Entertainment will offset losses from the drop in Flutter Entertainment's long position.| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
| Flutter Entertainment vs. Tandy Leather Factory | Flutter Entertainment vs. Skechers USA | Flutter Entertainment vs. Steven Madden | Flutter Entertainment vs. Mid Atlantic Home Health |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |