Correlation Between Netflix and Global Data
Can any of the company-specific risk be diversified away by investing in both Netflix and Global Data 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 Global Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and Global Data Centre, you can compare the effects of market volatilities on Netflix and Global Data 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 Global Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Global Data.
Diversification Opportunities for Netflix and Global Data
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Netflix and Global is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Global Data Centre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Data Centre 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 Global Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Data Centre has no effect on the direction of Netflix i.e., Netflix and Global Data go up and down completely randomly.
Pair Corralation between Netflix and Global Data
Given the investment horizon of 90 days Netflix is expected to generate 0.41 times more return on investment than Global Data. However, Netflix is 2.44 times less risky than Global Data. It trades about 0.15 of its potential returns per unit of risk. Global Data Centre is currently generating about 0.03 per unit of risk. If you would invest 45,989 in Netflix on September 4, 2024 and sell it today you would earn a total of 43,785 from holding Netflix or generate 95.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Netflix vs. Global Data Centre
Performance |
| Timeline |
| Netflix |
| Global Data Centre |
Netflix and Global Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and Global Data
The main advantage of trading using opposite Netflix and Global Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, Global Data 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 Global Data will offset losses from the drop in Global Data's long position.| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
| Global Data vs. Westpac Banking | Global Data vs. Ecofibre | Global Data vs. Adriatic Metals Plc | Global Data vs. Australian Dairy Farms |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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