Correlation Between Netflix and Supernova Energy
Can any of the company-specific risk be diversified away by investing in both Netflix and Supernova Energy 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 Supernova Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and Supernova Energy, you can compare the effects of market volatilities on Netflix and Supernova Energy 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 Supernova Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Supernova Energy.
Diversification Opportunities for Netflix and Supernova Energy
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Netflix and Supernova is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Supernova Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supernova Energy 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 Supernova Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supernova Energy has no effect on the direction of Netflix i.e., Netflix and Supernova Energy go up and down completely randomly.
Pair Corralation between Netflix and Supernova Energy
Given the investment horizon of 90 days Netflix is expected to generate 2.01 times less return on investment than Supernova Energy. But when comparing it to its historical volatility, Netflix is 7.25 times less risky than Supernova Energy. It trades about 0.16 of its potential returns per unit of risk. Supernova Energy is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 0.30 in Supernova Energy on September 4, 2024 and sell it today you would lose (0.27) from holding Supernova Energy or give up 90.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.66% |
| Values | Daily Returns |
Netflix vs. Supernova Energy
Performance |
| Timeline |
| Netflix |
| Supernova Energy |
Netflix and Supernova Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and Supernova Energy
The main advantage of trading using opposite Netflix and Supernova Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, Supernova Energy 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 Supernova Energy will offset losses from the drop in Supernova Energy's long position.| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
| Supernova Energy vs. Cross Timbers Royalty | Supernova Energy vs. Kimbell Royalty Partners | Supernova Energy vs. Black Stone Minerals | Supernova Energy vs. VOC Energy Trust |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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