Correlation Between Netflix and Look Holdings
Can any of the company-specific risk be diversified away by investing in both Netflix and Look Holdings 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 Look Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and Look Holdings, you can compare the effects of market volatilities on Netflix and Look Holdings 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 Look Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Look Holdings.
Diversification Opportunities for Netflix and Look Holdings
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Netflix and Look is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Look Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Look Holdings 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 Look Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Look Holdings has no effect on the direction of Netflix i.e., Netflix and Look Holdings go up and down completely randomly.
Pair Corralation between Netflix and Look Holdings
Given the investment horizon of 90 days Netflix is expected to generate 3.57 times more return on investment than Look Holdings. However, Netflix is 3.57 times more volatile than Look Holdings. It trades about 0.57 of its potential returns per unit of risk. Look Holdings is currently generating about 0.43 per unit of risk. If you would invest 75,551 in Netflix on September 4, 2024 and sell it today you would earn a total of 14,223 from holding Netflix or generate 18.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Netflix vs. Look Holdings
Performance |
| Timeline |
| Netflix |
| Look Holdings |
Netflix and Look Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and Look Holdings
The main advantage of trading using opposite Netflix and Look Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, Look Holdings 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 Look Holdings will offset losses from the drop in Look Holdings' long position.| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
| Look Holdings vs. GRUPO CARSO A1 | Look Holdings vs. INTER CARS SA | Look Holdings vs. Chesapeake Utilities | Look Holdings vs. Geely Automobile 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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