Correlation Between Netflix and Kubota
Can any of the company-specific risk be diversified away by investing in both Netflix and Kubota 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 Kubota into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and Kubota, you can compare the effects of market volatilities on Netflix and Kubota 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 Kubota. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Kubota.
Diversification Opportunities for Netflix and Kubota
Pay attention - limited upside
The 3 months correlation between Netflix and Kubota is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Kubota in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kubota 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 Kubota. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kubota has no effect on the direction of Netflix i.e., Netflix and Kubota go up and down completely randomly.
Pair Corralation between Netflix and Kubota
Given the investment horizon of 90 days Netflix is expected to generate 1.06 times more return on investment than Kubota. However, Netflix is 1.06 times more volatile than Kubota. It trades about 0.23 of its potential returns per unit of risk. Kubota is currently generating about -0.15 per unit of risk. If you would invest 70,735 in Netflix on August 28, 2024 and sell it today you would earn a total of 15,824 from holding Netflix or generate 22.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Netflix vs. Kubota
Performance |
| Timeline |
| Netflix |
| Kubota |
Netflix and Kubota Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and Kubota
The main advantage of trading using opposite Netflix and Kubota positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, Kubota 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 Kubota will offset losses from the drop in Kubota's long position.| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
| Kubota vs. Lion Electric Corp | Kubota vs. Nikola Corp | Kubota vs. Buhler Industries | Kubota vs. Toyota Industries |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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