Correlation Between Netflix and Premier Foods
Can any of the company-specific risk be diversified away by investing in both Netflix and Premier Foods 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 Premier Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and Premier Foods PLC, you can compare the effects of market volatilities on Netflix and Premier Foods 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 Premier Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Premier Foods.
Diversification Opportunities for Netflix and Premier Foods
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Netflix and Premier is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Premier Foods PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Foods 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 Premier Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Foods PLC has no effect on the direction of Netflix i.e., Netflix and Premier Foods go up and down completely randomly.
Pair Corralation between Netflix and Premier Foods
Given the investment horizon of 90 days Netflix is expected to generate 1.01 times more return on investment than Premier Foods. However, Netflix is 1.01 times more volatile than Premier Foods PLC. It trades about 0.55 of its potential returns per unit of risk. Premier Foods PLC is currently generating about 0.09 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 | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Netflix vs. Premier Foods PLC
Performance |
| Timeline |
| Netflix |
| Premier Foods PLC |
Netflix and Premier Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and Premier Foods
The main advantage of trading using opposite Netflix and Premier Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, Premier Foods 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 Premier Foods will offset losses from the drop in Premier Foods' long position.| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
| Premier Foods vs. Nestl SA | Premier Foods vs. Kraft Heinz Co | Premier Foods vs. General Mills | Premier Foods vs. Kellogg Company |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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