Correlation Between Netflix and Sika AG
Can any of the company-specific risk be diversified away by investing in both Netflix and Sika AG 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 Sika AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and Sika AG ADR, you can compare the effects of market volatilities on Netflix and Sika AG 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 Sika AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Sika AG.
Diversification Opportunities for Netflix and Sika AG
Pay attention - limited upside
The 3 months correlation between Netflix and Sika is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Sika AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sika AG ADR 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 Sika AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sika AG ADR has no effect on the direction of Netflix i.e., Netflix and Sika AG go up and down completely randomly.
Pair Corralation between Netflix and Sika AG
Given the investment horizon of 90 days Netflix is expected to generate 0.83 times more return on investment than Sika AG. However, Netflix is 1.2 times less risky than Sika AG. It trades about 0.69 of its potential returns per unit of risk. Sika AG ADR is currently generating about -0.28 per unit of risk. If you would invest 74,929 in Netflix on August 24, 2024 and sell it today you would earn a total of 14,819 from holding Netflix or generate 19.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Netflix vs. Sika AG ADR
Performance |
| Timeline |
| Netflix |
| Sika AG ADR |
Netflix and Sika AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and Sika AG
The main advantage of trading using opposite Netflix and Sika AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, Sika AG 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 Sika AG will offset losses from the drop in Sika AG's long position.| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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