Correlation Between Netflix and PACIFICORP

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Can any of the company-specific risk be diversified away by investing in both Netflix and PACIFICORP 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 PACIFICORP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and PACIFICORP 625 percent, you can compare the effects of market volatilities on Netflix and PACIFICORP 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 PACIFICORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and PACIFICORP.

Diversification Opportunities for Netflix and PACIFICORP

-0.65
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Netflix and PACIFICORP is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and PACIFICORP 625 percent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PACIFICORP 625 percent 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 PACIFICORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PACIFICORP 625 percent has no effect on the direction of Netflix i.e., Netflix and PACIFICORP go up and down completely randomly.

Pair Corralation between Netflix and PACIFICORP

Given the investment horizon of 90 days Netflix is expected to generate 1.38 times more return on investment than PACIFICORP. However, Netflix is 1.38 times more volatile than PACIFICORP 625 percent. It trades about 0.11 of its potential returns per unit of risk. PACIFICORP 625 percent is currently generating about 0.0 per unit of risk. If you would invest  31,517  in Netflix on August 31, 2024 and sell it today you would earn a total of  56,217  from holding Netflix or generate 178.37% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy91.19%
ValuesDaily Returns

Netflix  vs.  PACIFICORP 625 percent

 Performance 
       Timeline  
Netflix 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Netflix are ranked lower than 17 (%) 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.
PACIFICORP 625 percent 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days PACIFICORP 625 percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, PACIFICORP is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Netflix and PACIFICORP Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Netflix and PACIFICORP

The main advantage of trading using opposite Netflix and PACIFICORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, PACIFICORP 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 PACIFICORP will offset losses from the drop in PACIFICORP's long position.
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The idea behind Netflix and PACIFICORP 625 percent 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 Commodity Directory module to find actively traded commodities issued by global exchanges.

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