Correlation Between Netflix and Limestone Boat
Can any of the company-specific risk be diversified away by investing in both Netflix and Limestone Boat 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 Limestone Boat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and The Limestone Boat, you can compare the effects of market volatilities on Netflix and Limestone Boat 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 Limestone Boat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Limestone Boat.
Diversification Opportunities for Netflix and Limestone Boat
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Netflix and Limestone is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and The Limestone Boat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Limestone Boat 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 Limestone Boat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Limestone Boat has no effect on the direction of Netflix i.e., Netflix and Limestone Boat go up and down completely randomly.
Pair Corralation between Netflix and Limestone Boat
Given the investment horizon of 90 days Netflix is expected to generate 0.39 times more return on investment than Limestone Boat. However, Netflix is 2.57 times less risky than Limestone Boat. It trades about 0.13 of its potential returns per unit of risk. The Limestone Boat is currently generating about -0.11 per unit of risk. If you would invest 60,167 in Netflix on August 25, 2024 and sell it today you would earn a total of 29,612 from holding Netflix or generate 49.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Netflix vs. The Limestone Boat
Performance |
| Timeline |
| Netflix |
| Limestone Boat |
Netflix and Limestone Boat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and Limestone Boat
The main advantage of trading using opposite Netflix and Limestone Boat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, Limestone Boat 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 Limestone Boat will offset losses from the drop in Limestone Boat'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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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