Correlation Between Netflix and Givaudan
Can any of the company-specific risk be diversified away by investing in both Netflix and Givaudan 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 Givaudan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and Givaudan SA ADR, you can compare the effects of market volatilities on Netflix and Givaudan 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 Givaudan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Givaudan.
Diversification Opportunities for Netflix and Givaudan
Pay attention - limited upside
The 3 months correlation between Netflix and Givaudan is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Givaudan SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Givaudan SA ADR 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 Givaudan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Givaudan SA ADR has no effect on the direction of Netflix i.e., Netflix and Givaudan go up and down completely randomly.
Pair Corralation between Netflix and Givaudan
Given the investment horizon of 90 days Netflix is expected to generate 1.1 times more return on investment than Givaudan. However, Netflix is 1.1 times more volatile than Givaudan SA ADR. It trades about 0.46 of its potential returns per unit of risk. Givaudan SA ADR is currently generating about -0.33 per unit of risk. If you would invest 74,912 in Netflix on August 28, 2024 and sell it today you would earn a total of 11,647 from holding Netflix or generate 15.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Netflix vs. Givaudan SA ADR
Performance |
| Timeline |
| Netflix |
| Givaudan SA ADR |
Netflix and Givaudan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and Givaudan
The main advantage of trading using opposite Netflix and Givaudan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, Givaudan 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 Givaudan will offset losses from the drop in Givaudan's long position.| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
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 Correlations module to find global opportunities by holding instruments from different markets.
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