Correlation Between Netflix and SkiStar AB
Can any of the company-specific risk be diversified away by investing in both Netflix and SkiStar AB 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 SkiStar AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and SkiStar AB, you can compare the effects of market volatilities on Netflix and SkiStar AB 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 SkiStar AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and SkiStar AB.
Diversification Opportunities for Netflix and SkiStar AB
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Netflix and SkiStar is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and SkiStar AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SkiStar AB 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 SkiStar AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SkiStar AB has no effect on the direction of Netflix i.e., Netflix and SkiStar AB go up and down completely randomly.
Pair Corralation between Netflix and SkiStar AB
Given the investment horizon of 90 days Netflix is expected to generate 1.27 times more return on investment than SkiStar AB. However, Netflix is 1.27 times more volatile than SkiStar AB. It trades about 0.57 of its potential returns per unit of risk. SkiStar AB is currently generating about 0.07 per unit of risk. If you would invest 75,551 in Netflix on September 4, 2024 and sell it today you would earn a total of 14,223 from holding Netflix or generate 18.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Netflix vs. SkiStar AB
Performance |
| Timeline |
| Netflix |
| SkiStar AB |
Netflix and SkiStar AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and SkiStar AB
The main advantage of trading using opposite Netflix and SkiStar AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, SkiStar AB 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 SkiStar AB will offset losses from the drop in SkiStar AB's long position.| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
| SkiStar AB vs. Peab AB | SkiStar AB vs. Axfood AB | SkiStar AB vs. Thule Group AB | SkiStar AB vs. Avanza Bank Holding |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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