Correlation Between NYSE Composite and Netflix
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Netflix 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 NYSE Composite and Netflix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Netflix, you can compare the effects of market volatilities on NYSE Composite and Netflix 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 NYSE Composite with a short position of Netflix. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Netflix.
Diversification Opportunities for NYSE Composite and Netflix
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Netflix is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Netflix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netflix and NYSE Composite 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 NYSE Composite are associated (or correlated) with Netflix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netflix has no effect on the direction of NYSE Composite i.e., NYSE Composite and Netflix go up and down completely randomly.
Pair Corralation between NYSE Composite and Netflix
Assuming the 90 days trading horizon NYSE Composite is expected to generate 10.32 times less return on investment than Netflix. But when comparing it to its historical volatility, NYSE Composite is 1.97 times less risky than Netflix. It trades about 0.11 of its potential returns per unit of risk. Netflix is currently generating about 0.55 of returns per unit of risk over similar time horizon. If you would invest 76,424 in Netflix on August 23, 2024 and sell it today you would earn a total of 13,324 from holding Netflix or generate 17.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Netflix
Performance |
| Timeline |
NYSE Composite and Netflix Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Netflix
Pair trading matchups for Netflix
Pair Trading with NYSE Composite and Netflix
The main advantage of trading using opposite NYSE Composite and Netflix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Netflix 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 Netflix will offset losses from the drop in Netflix's long position.| NYSE Composite vs. Akanda Corp | NYSE Composite vs. Valneva SE ADR | NYSE Composite vs. Radcom | NYSE Composite vs. Western Digital |
| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Global Correlations Find global opportunities by holding instruments from different markets |