Correlation Between Netflix and Nextferm Technologies
Can any of the company-specific risk be diversified away by investing in both Netflix and Nextferm Technologies 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 Nextferm Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and Nextferm Technologies, you can compare the effects of market volatilities on Netflix and Nextferm Technologies 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 Nextferm Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Nextferm Technologies.
Diversification Opportunities for Netflix and Nextferm Technologies
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Netflix and Nextferm is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Nextferm Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextferm Technologies 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 Nextferm Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextferm Technologies has no effect on the direction of Netflix i.e., Netflix and Nextferm Technologies go up and down completely randomly.
Pair Corralation between Netflix and Nextferm Technologies
Given the investment horizon of 90 days Netflix is expected to generate 0.33 times more return on investment than Nextferm Technologies. However, Netflix is 3.08 times less risky than Nextferm Technologies. It trades about 0.12 of its potential returns per unit of risk. Nextferm Technologies is currently generating about -0.06 per unit of risk. If you would invest 29,041 in Netflix on September 5, 2024 and sell it today you would earn a total of 61,176 from holding Netflix or generate 210.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 77.98% |
| Values | Daily Returns |
Netflix vs. Nextferm Technologies
Performance |
| Timeline |
| Netflix |
| Nextferm Technologies |
Netflix and Nextferm Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and Nextferm Technologies
The main advantage of trading using opposite Netflix and Nextferm Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, Nextferm Technologies 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 Nextferm Technologies will offset losses from the drop in Nextferm Technologies' long position.| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
| Nextferm Technologies vs. Strauss Group | Nextferm Technologies vs. Neto Malinda | Nextferm Technologies vs. Kerur Holdings | Nextferm Technologies vs. Willy Food |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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