Correlation Between Netflix and Stargaze Entertainment
Can any of the company-specific risk be diversified away by investing in both Netflix and Stargaze Entertainment 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 Stargaze Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and Stargaze Entertainment Group, you can compare the effects of market volatilities on Netflix and Stargaze Entertainment 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 Stargaze Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Stargaze Entertainment.
Diversification Opportunities for Netflix and Stargaze Entertainment
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Netflix and Stargaze is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Stargaze Entertainment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stargaze Entertainment 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 Stargaze Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stargaze Entertainment has no effect on the direction of Netflix i.e., Netflix and Stargaze Entertainment go up and down completely randomly.
Pair Corralation between Netflix and Stargaze Entertainment
Given the investment horizon of 90 days Netflix is expected to generate 4.02 times less return on investment than Stargaze Entertainment. But when comparing it to its historical volatility, Netflix is 13.65 times less risky than Stargaze Entertainment. It trades about 0.44 of its potential returns per unit of risk. Stargaze Entertainment Group is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 0.64 in Stargaze Entertainment Group on August 30, 2024 and sell it today you would earn a total of 0.15 from holding Stargaze Entertainment Group or generate 23.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Netflix vs. Stargaze Entertainment Group
Performance |
| Timeline |
| Netflix |
| Stargaze Entertainment |
Netflix and Stargaze Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and Stargaze Entertainment
The main advantage of trading using opposite Netflix and Stargaze Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, Stargaze Entertainment 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 Stargaze Entertainment will offset losses from the drop in Stargaze Entertainment's long position.| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
| Stargaze Entertainment vs. Warner Music Group | Stargaze Entertainment vs. Live Nation Entertainment | Stargaze Entertainment vs. Atlanta Braves Holdings, | Stargaze Entertainment vs. Warner Bros Discovery |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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