Correlation Between Netflix and Crédit Agricole
Can any of the company-specific risk be diversified away by investing in both Netflix and Crédit Agricole 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 Crédit Agricole into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and Crdit Agricole SA, you can compare the effects of market volatilities on Netflix and Crédit Agricole 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 Crédit Agricole. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Crédit Agricole.
Diversification Opportunities for Netflix and Crédit Agricole
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Netflix and Crédit is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Crdit Agricole SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crdit Agricole SA 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 Crédit Agricole. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crdit Agricole SA has no effect on the direction of Netflix i.e., Netflix and Crédit Agricole go up and down completely randomly.
Pair Corralation between Netflix and Crédit Agricole
Given the investment horizon of 90 days Netflix is expected to generate 0.84 times more return on investment than Crédit Agricole. However, Netflix is 1.2 times less risky than Crédit Agricole. It trades about 0.55 of its potential returns per unit of risk. Crdit Agricole SA is currently generating about -0.32 per unit of risk. If you would invest 75,551 in Netflix on September 3, 2024 and sell it today you would earn a total of 13,130 from holding Netflix or generate 17.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Netflix vs. Crdit Agricole SA
Performance |
| Timeline |
| Netflix |
| Crdit Agricole SA |
Netflix and Crédit Agricole Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and Crédit Agricole
The main advantage of trading using opposite Netflix and Crédit Agricole positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, Crédit Agricole 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 Crédit Agricole will offset losses from the drop in Crédit Agricole'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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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