Correlation Between Netflix and Madison Square
Can any of the company-specific risk be diversified away by investing in both Netflix and Madison Square 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 Madison Square into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and Madison Square Garden, you can compare the effects of market volatilities on Netflix and Madison Square 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 Madison Square. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Madison Square.
Diversification Opportunities for Netflix and Madison Square
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Netflix and Madison is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Madison Square Garden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison Square Garden 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 Madison Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison Square Garden has no effect on the direction of Netflix i.e., Netflix and Madison Square go up and down completely randomly.
Pair Corralation between Netflix and Madison Square
Given the investment horizon of 90 days Netflix is expected to generate 2.04 times more return on investment than Madison Square. However, Netflix is 2.04 times more volatile than Madison Square Garden. It trades about 0.22 of its potential returns per unit of risk. Madison Square Garden is currently generating about 0.19 per unit of risk. If you would invest 67,532 in Netflix on August 31, 2024 and sell it today you would earn a total of 20,202 from holding Netflix or generate 29.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Netflix vs. Madison Square Garden
Performance |
| Timeline |
| Netflix |
| Madison Square Garden |
Netflix and Madison Square Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and Madison Square
The main advantage of trading using opposite Netflix and Madison Square positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, Madison Square 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 Madison Square will offset losses from the drop in Madison Square's long position.| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
| Madison Square vs. Roku Inc | Madison Square vs. AMC Entertainment Holdings | Madison Square vs. Paramount Global Class | Madison Square vs. Warner Bros Discovery |
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.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |