Correlation Between Netflix and Tegna
Can any of the company-specific risk be diversified away by investing in both Netflix and Tegna 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 Tegna into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and Tegna Inc, you can compare the effects of market volatilities on Netflix and Tegna 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 Tegna. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Tegna.
Diversification Opportunities for Netflix and Tegna
Very poor diversification
The 3 months correlation between Netflix and Tegna is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Tegna Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tegna Inc 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 Tegna. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tegna Inc has no effect on the direction of Netflix i.e., Netflix and Tegna go up and down completely randomly.
Pair Corralation between Netflix and Tegna
Given the investment horizon of 90 days Netflix is expected to generate 0.79 times more return on investment than Tegna. However, Netflix is 1.26 times less risky than Tegna. It trades about 0.16 of its potential returns per unit of risk. Tegna Inc is currently generating about 0.1 per unit of risk. If you would invest 63,379 in Netflix on August 30, 2024 and sell it today you would earn a total of 24,355 from holding Netflix or generate 38.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Netflix vs. Tegna Inc
Performance |
| Timeline |
| Netflix |
| Tegna Inc |
Netflix and Tegna Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and Tegna
The main advantage of trading using opposite Netflix and Tegna positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, Tegna 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 Tegna will offset losses from the drop in Tegna's long position.| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
| Tegna vs. News Corp B | Tegna vs. News Corp A | Tegna vs. Live Nation Entertainment | Tegna vs. Paramount Global Class |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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