Correlation Between Netflix and MTR Corp
Can any of the company-specific risk be diversified away by investing in both Netflix and MTR Corp 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 MTR Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and MTR Corp Ltd, you can compare the effects of market volatilities on Netflix and MTR Corp 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 MTR Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and MTR Corp.
Diversification Opportunities for Netflix and MTR Corp
Very good diversification
The 3 months correlation between Netflix and MTR is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and MTR Corp Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTR Corp 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 MTR Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTR Corp has no effect on the direction of Netflix i.e., Netflix and MTR Corp go up and down completely randomly.
Pair Corralation between Netflix and MTR Corp
Given the investment horizon of 90 days Netflix is expected to generate 0.71 times more return on investment than MTR Corp. However, Netflix is 1.41 times less risky than MTR Corp. It trades about 0.16 of its potential returns per unit of risk. MTR Corp Ltd is currently generating about 0.0 per unit of risk. If you would invest 37,332 in Netflix on September 4, 2024 and sell it today you would earn a total of 52,442 from holding Netflix or generate 140.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 75.52% |
| Values | Daily Returns |
Netflix vs. MTR Corp Ltd
Performance |
| Timeline |
| Netflix |
| MTR Corp |
Netflix and MTR Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and MTR Corp
The main advantage of trading using opposite Netflix and MTR Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, MTR Corp 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 MTR Corp will offset losses from the drop in MTR Corp's long position.| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment 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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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