Correlation Between Netflix and Power Global
Can any of the company-specific risk be diversified away by investing in both Netflix and Power Global 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 Power Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and Power Global Tactical, you can compare the effects of market volatilities on Netflix and Power Global 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 Power Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Power Global.
Diversification Opportunities for Netflix and Power Global
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Netflix and Power is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Power Global Tactical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Global Tactical 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 Power Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Global Tactical has no effect on the direction of Netflix i.e., Netflix and Power Global go up and down completely randomly.
Pair Corralation between Netflix and Power Global
Given the investment horizon of 90 days Netflix is expected to generate 4.23 times more return on investment than Power Global. However, Netflix is 4.23 times more volatile than Power Global Tactical. It trades about 0.1 of its potential returns per unit of risk. Power Global Tactical is currently generating about 0.09 per unit of risk. If you would invest 32,034 in Netflix on September 3, 2024 and sell it today you would earn a total of 56,647 from holding Netflix or generate 176.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Netflix vs. Power Global Tactical
Performance |
| Timeline |
| Netflix |
| Power Global Tactical |
Netflix and Power Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and Power Global
The main advantage of trading using opposite Netflix and Power Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, Power Global 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 Power Global will offset losses from the drop in Power Global's long position.| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
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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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