Correlation Between Netflix and Swatch Group
Can any of the company-specific risk be diversified away by investing in both Netflix and Swatch Group 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 Swatch Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and Swatch Group AG, you can compare the effects of market volatilities on Netflix and Swatch Group 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 Swatch Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Swatch Group.
Diversification Opportunities for Netflix and Swatch Group
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Netflix and Swatch is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Swatch Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swatch Group AG 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 Swatch Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swatch Group AG has no effect on the direction of Netflix i.e., Netflix and Swatch Group go up and down completely randomly.
Pair Corralation between Netflix and Swatch Group
Given the investment horizon of 90 days Netflix is expected to generate 1.22 times more return on investment than Swatch Group. However, Netflix is 1.22 times more volatile than Swatch Group AG. It trades about 0.11 of its potential returns per unit of risk. Swatch Group AG is currently generating about -0.06 per unit of risk. If you would invest 35,857 in Netflix on September 4, 2024 and sell it today you would earn a total of 53,917 from holding Netflix or generate 150.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.78% |
| Values | Daily Returns |
Netflix vs. Swatch Group AG
Performance |
| Timeline |
| Netflix |
| Swatch Group AG |
Netflix and Swatch Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and Swatch Group
The main advantage of trading using opposite Netflix and Swatch Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, Swatch Group 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 Swatch Group will offset losses from the drop in Swatch Group's long position.| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
| Swatch Group vs. Swatch Group AG | Swatch Group vs. Schindler Holding AG | Swatch Group vs. Swisscom AG | Swatch Group vs. Logitech International SA |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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