Correlation Between Netflix and Utilities Fund
Can any of the company-specific risk be diversified away by investing in both Netflix and Utilities Fund 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 Utilities Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and Utilities Fund Class, you can compare the effects of market volatilities on Netflix and Utilities Fund 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 Utilities Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Utilities Fund.
Diversification Opportunities for Netflix and Utilities Fund
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Netflix and Utilities is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Utilities Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Utilities Fund Class 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 Utilities Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Utilities Fund Class has no effect on the direction of Netflix i.e., Netflix and Utilities Fund go up and down completely randomly.
Pair Corralation between Netflix and Utilities Fund
Given the investment horizon of 90 days Netflix is expected to generate 2.02 times more return on investment than Utilities Fund. However, Netflix is 2.02 times more volatile than Utilities Fund Class. It trades about 0.26 of its potential returns per unit of risk. Utilities Fund Class is currently generating about 0.03 per unit of risk. If you would invest 68,680 in Netflix on September 12, 2024 and sell it today you would earn a total of 24,976 from holding Netflix or generate 36.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Netflix vs. Utilities Fund Class
Performance |
| Timeline |
| Netflix |
| Utilities Fund Class |
Netflix and Utilities Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and Utilities Fund
The main advantage of trading using opposite Netflix and Utilities Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, Utilities Fund 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 Utilities Fund will offset losses from the drop in Utilities Fund's long position.| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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