Correlation Between Netflix and News Corp
Can any of the company-specific risk be diversified away by investing in both Netflix and News 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 News Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and News Corp A, you can compare the effects of market volatilities on Netflix and News 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 News Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and News Corp.
Diversification Opportunities for Netflix and News Corp
Poor diversification
The 3 months correlation between Netflix and News is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and News Corp A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on News Corp A 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 News Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of News Corp A has no effect on the direction of Netflix i.e., Netflix and News Corp go up and down completely randomly.
Pair Corralation between Netflix and News Corp
Given the investment horizon of 90 days Netflix is expected to generate 1.4 times more return on investment than News Corp. However, Netflix is 1.4 times more volatile than News Corp A. It trades about 0.1 of its potential returns per unit of risk. News Corp A is currently generating about 0.07 per unit of risk. If you would invest 32,001 in Netflix on August 30, 2024 and sell it today you would earn a total of 55,733 from holding Netflix or generate 174.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Netflix vs. News Corp A
Performance |
| Timeline |
| Netflix |
| News Corp A |
Netflix and News Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and News Corp
The main advantage of trading using opposite Netflix and News Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, News 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 News Corp will offset losses from the drop in News Corp's long position.| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
| News Corp vs. Marcus | News Corp vs. Liberty Media | News Corp vs. Warner Music Group | News Corp vs. Fox Corp Class |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. |