Correlation Between Netflix and Walgreens Boots
Can any of the company-specific risk be diversified away by investing in both Netflix and Walgreens Boots 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 Walgreens Boots into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and Walgreens Boots Alliance, you can compare the effects of market volatilities on Netflix and Walgreens Boots 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 Walgreens Boots. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Walgreens Boots.
Diversification Opportunities for Netflix and Walgreens Boots
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Netflix and Walgreens is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Walgreens Boots Alliance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walgreens Boots Alliance 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 Walgreens Boots. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walgreens Boots Alliance has no effect on the direction of Netflix i.e., Netflix and Walgreens Boots go up and down completely randomly.
Pair Corralation between Netflix and Walgreens Boots
Given the investment horizon of 90 days Netflix is expected to generate 0.5 times more return on investment than Walgreens Boots. However, Netflix is 2.01 times less risky than Walgreens Boots. It trades about 0.17 of its potential returns per unit of risk. Walgreens Boots Alliance is currently generating about -0.09 per unit of risk. If you would invest 59,697 in Netflix on September 3, 2024 and sell it today you would earn a total of 28,984 from holding Netflix or generate 48.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.69% |
| Values | Daily Returns |
Netflix vs. Walgreens Boots Alliance
Performance |
| Timeline |
| Netflix |
| Walgreens Boots Alliance |
Netflix and Walgreens Boots Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and Walgreens Boots
The main advantage of trading using opposite Netflix and Walgreens Boots positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, Walgreens Boots 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 Walgreens Boots will offset losses from the drop in Walgreens Boots' long position.| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
| Walgreens Boots vs. Walgreens Boots Alliance | Walgreens Boots vs. Walgreens Boots Alliance | Walgreens Boots vs. Walgreens Boots Alliance | Walgreens Boots vs. Walgreens Boots Alliance |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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