Correlation Between Netflix and NISOURCE

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Can any of the company-specific risk be diversified away by investing in both Netflix and NISOURCE 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 NISOURCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and NISOURCE FIN P, you can compare the effects of market volatilities on Netflix and NISOURCE 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 NISOURCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and NISOURCE.

Diversification Opportunities for Netflix and NISOURCE

-0.38
  Correlation Coefficient

Very good diversification

The 3 months correlation between Netflix and NISOURCE is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and NISOURCE FIN P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NISOURCE FIN P 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 NISOURCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NISOURCE FIN P has no effect on the direction of Netflix i.e., Netflix and NISOURCE go up and down completely randomly.

Pair Corralation between Netflix and NISOURCE

Given the investment horizon of 90 days Netflix is expected to generate 61.4 times less return on investment than NISOURCE. But when comparing it to its historical volatility, Netflix is 57.15 times less risky than NISOURCE. It trades about 0.1 of its potential returns per unit of risk. NISOURCE FIN P is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  9,968  in NISOURCE FIN P on September 3, 2024 and sell it today you would earn a total of  7.00  from holding NISOURCE FIN P or generate 0.07% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy51.72%
ValuesDaily Returns

Netflix  vs.  NISOURCE FIN P

 Performance 
       Timeline  
Netflix 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Netflix are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Netflix showed solid returns over the last few months and may actually be approaching a breakup point.
NISOURCE FIN P 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in NISOURCE FIN P are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, NISOURCE is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Netflix and NISOURCE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Netflix and NISOURCE

The main advantage of trading using opposite Netflix and NISOURCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, NISOURCE 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 NISOURCE will offset losses from the drop in NISOURCE's long position.
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The idea behind Netflix and NISOURCE FIN P pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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