Correlation Between Netflix and Well Graded
Can any of the company-specific risk be diversified away by investing in both Netflix and Well Graded 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 Well Graded into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and Well Graded Engineering, you can compare the effects of market volatilities on Netflix and Well Graded 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 Well Graded. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Well Graded.
Diversification Opportunities for Netflix and Well Graded
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Netflix and Well is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Well Graded Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Well Graded Engineering 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 Well Graded. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Well Graded Engineering has no effect on the direction of Netflix i.e., Netflix and Well Graded go up and down completely randomly.
Pair Corralation between Netflix and Well Graded
Given the investment horizon of 90 days Netflix is expected to generate 0.5 times more return on investment than Well Graded. However, Netflix is 2.01 times less risky than Well Graded. It trades about 0.15 of its potential returns per unit of risk. Well Graded Engineering is currently generating about 0.0 per unit of risk. If you would invest 45,376 in Netflix on September 3, 2024 and sell it today you would earn a total of 43,305 from holding Netflix or generate 95.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 97.17% |
| Values | Daily Returns |
Netflix vs. Well Graded Engineering
Performance |
| Timeline |
| Netflix |
| Well Graded Engineering |
Netflix and Well Graded Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and Well Graded
The main advantage of trading using opposite Netflix and Well Graded positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, Well Graded 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 Well Graded will offset losses from the drop in Well Graded's long position.| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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