Correlation Between Netflix and Principal
Can any of the company-specific risk be diversified away by investing in both Netflix and Principal 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 Principal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and Principal, you can compare the effects of market volatilities on Netflix and Principal 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 Principal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Principal.
Diversification Opportunities for Netflix and Principal
Almost no diversification
The 3 months correlation between Netflix and Principal is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Principal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Principal 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 Principal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Principal has no effect on the direction of Netflix i.e., Netflix and Principal go up and down completely randomly.
Pair Corralation between Netflix and Principal
If you would invest 80,544 in Netflix on September 12, 2024 and sell it today you would earn a total of 13,486 from holding Netflix or generate 16.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 4.55% |
| Values | Daily Returns |
Netflix vs. Principal
Performance |
| Timeline |
| Netflix |
| Principal |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Netflix and Principal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and Principal
The main advantage of trading using opposite Netflix and Principal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, Principal 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 Principal will offset losses from the drop in Principal's long position.| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
| Principal vs. Vanguard SP 500 | Principal vs. Vanguard Real Estate | Principal vs. Vanguard Total Bond | Principal vs. Vanguard High Dividend |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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