Correlation Between Netflix and Western Asset
Can any of the company-specific risk be diversified away by investing in both Netflix and Western Asset 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 Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and Western Asset Inflation, you can compare the effects of market volatilities on Netflix and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Western Asset.
Diversification Opportunities for Netflix and Western Asset
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Netflix and Western is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Western Asset Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Inflation 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Inflation has no effect on the direction of Netflix i.e., Netflix and Western Asset go up and down completely randomly.
Pair Corralation between Netflix and Western Asset
Given the investment horizon of 90 days Netflix is expected to generate 5.3 times more return on investment than Western Asset. However, Netflix is 5.3 times more volatile than Western Asset Inflation. It trades about 0.12 of its potential returns per unit of risk. Western Asset Inflation is currently generating about 0.03 per unit of risk. If you would invest 29,775 in Netflix on September 12, 2024 and sell it today you would earn a total of 61,560 from holding Netflix or generate 206.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Netflix vs. Western Asset Inflation
Performance |
| Timeline |
| Netflix |
| Western Asset Inflation |
Netflix and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and Western Asset
The main advantage of trading using opposite Netflix and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
| Western Asset vs. Ubs Money Series | Western Asset vs. Money Market Obligations | Western Asset vs. Franklin Government Money | Western Asset vs. Blackrock Exchange Portfolio |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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