Correlation Between Netflix and Mexican Gold
Can any of the company-specific risk be diversified away by investing in both Netflix and Mexican Gold 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 Mexican Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and Mexican Gold Mining, you can compare the effects of market volatilities on Netflix and Mexican Gold 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 Mexican Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Mexican Gold.
Diversification Opportunities for Netflix and Mexican Gold
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Netflix and Mexican is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Mexican Gold Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mexican Gold Mining 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 Mexican Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mexican Gold Mining has no effect on the direction of Netflix i.e., Netflix and Mexican Gold go up and down completely randomly.
Pair Corralation between Netflix and Mexican Gold
Given the investment horizon of 90 days Netflix is expected to generate 0.18 times more return on investment than Mexican Gold. However, Netflix is 5.64 times less risky than Mexican Gold. It trades about 0.19 of its potential returns per unit of risk. Mexican Gold Mining is currently generating about -0.08 per unit of risk. If you would invest 68,384 in Netflix on August 28, 2024 and sell it today you would earn a total of 18,175 from holding Netflix or generate 26.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Netflix vs. Mexican Gold Mining
Performance |
| Timeline |
| Netflix |
| Mexican Gold Mining |
Netflix and Mexican Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and Mexican Gold
The main advantage of trading using opposite Netflix and Mexican Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, Mexican Gold 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 Mexican Gold will offset losses from the drop in Mexican Gold's long position.| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
| Mexican Gold vs. Morningstar Unconstrained Allocation | Mexican Gold vs. High Yield Municipal Fund | Mexican Gold vs. Knife River | Mexican Gold vs. Klckner Co SE |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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