Correlation Between Netflix and GSK Plc
Can any of the company-specific risk be diversified away by investing in both Netflix and GSK Plc 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 GSK Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and GSK plc, you can compare the effects of market volatilities on Netflix and GSK Plc 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 GSK Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and GSK Plc.
Diversification Opportunities for Netflix and GSK Plc
Pay attention - limited upside
The 3 months correlation between Netflix and GSK is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and GSK plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSK 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 GSK Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GSK plc has no effect on the direction of Netflix i.e., Netflix and GSK Plc go up and down completely randomly.
Pair Corralation between Netflix and GSK Plc
Given the investment horizon of 90 days Netflix is expected to generate 0.4 times more return on investment than GSK Plc. However, Netflix is 2.52 times less risky than GSK Plc. It trades about 0.75 of its potential returns per unit of risk. GSK plc is currently generating about -0.2 per unit of risk. If you would invest 74,912 in Netflix on August 27, 2024 and sell it today you would earn a total of 14,867 from holding Netflix or generate 19.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Netflix vs. GSK plc
Performance |
| Timeline |
| Netflix |
| GSK plc |
Netflix and GSK Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and GSK Plc
The main advantage of trading using opposite Netflix and GSK Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, GSK Plc 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 GSK Plc will offset losses from the drop in GSK Plc's long position.| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
| GSK Plc vs. Santen Pharmaceutical Co | GSK Plc vs. Ono Pharmaceutical Co | GSK Plc vs. Grifols SA ADR | GSK Plc vs. Pfizer Inc |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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