Correlation Between Netflix and Spearmint Resources
Can any of the company-specific risk be diversified away by investing in both Netflix and Spearmint Resources 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 Spearmint Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and Spearmint Resources, you can compare the effects of market volatilities on Netflix and Spearmint Resources 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 Spearmint Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Spearmint Resources.
Diversification Opportunities for Netflix and Spearmint Resources
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Netflix and Spearmint is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Spearmint Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spearmint Resources 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 Spearmint Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spearmint Resources has no effect on the direction of Netflix i.e., Netflix and Spearmint Resources go up and down completely randomly.
Pair Corralation between Netflix and Spearmint Resources
Given the investment horizon of 90 days Netflix is expected to generate 1.88 times less return on investment than Spearmint Resources. But when comparing it to its historical volatility, Netflix is 13.42 times less risky than Spearmint Resources. It trades about 0.57 of its potential returns per unit of risk. Spearmint Resources is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1.59 in Spearmint Resources on September 4, 2024 and sell it today you would lose (0.05) from holding Spearmint Resources or give up 3.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Netflix vs. Spearmint Resources
Performance |
| Timeline |
| Netflix |
| Spearmint Resources |
Netflix and Spearmint Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and Spearmint Resources
The main advantage of trading using opposite Netflix and Spearmint Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, Spearmint Resources 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 Spearmint Resources will offset losses from the drop in Spearmint Resources' long position.| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
| Spearmint Resources vs. Qubec Nickel Corp | Spearmint Resources vs. IGO Limited | Spearmint Resources vs. Avarone Metals | Spearmint Resources vs. Adriatic Metals PLC |
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.
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