Correlation Between Netflix and Fox Corp
Can any of the company-specific risk be diversified away by investing in both Netflix and Fox Corp 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 Fox Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and Fox Corp Class, you can compare the effects of market volatilities on Netflix and Fox Corp 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 Fox Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Fox Corp.
Diversification Opportunities for Netflix and Fox Corp
Almost no diversification
The 3 months correlation between Netflix and Fox is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Fox Corp Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fox Corp Class 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 Fox Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fox Corp Class has no effect on the direction of Netflix i.e., Netflix and Fox Corp go up and down completely randomly.
Pair Corralation between Netflix and Fox Corp
Given the investment horizon of 90 days Netflix is expected to generate 0.83 times more return on investment than Fox Corp. However, Netflix is 1.21 times less risky than Fox Corp. It trades about 0.44 of its potential returns per unit of risk. Fox Corp Class is currently generating about 0.28 per unit of risk. If you would invest 75,944 in Netflix on August 30, 2024 and sell it today you would earn a total of 11,790 from holding Netflix or generate 15.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Netflix vs. Fox Corp Class
Performance |
| Timeline |
| Netflix |
| Fox Corp Class |
Netflix and Fox Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and Fox Corp
The main advantage of trading using opposite Netflix and Fox Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, Fox Corp 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 Fox Corp will offset losses from the drop in Fox Corp's long position.| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
| Fox Corp vs. News Corp B | Fox Corp vs. News Corp A | Fox Corp vs. Live Nation Entertainment | Fox Corp vs. Paramount Global Class |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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