Correlation Between Travelzoo and Netflix
Can any of the company-specific risk be diversified away by investing in both Travelzoo 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 Travelzoo and Netflix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Travelzoo and Netflix, you can compare the effects of market volatilities on Travelzoo 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 Travelzoo with a short position of Netflix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelzoo and Netflix.
Diversification Opportunities for Travelzoo and Netflix
Poor diversification
The 3 months correlation between Travelzoo and Netflix is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Travelzoo and Netflix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netflix and Travelzoo 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 Travelzoo 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 Travelzoo i.e., Travelzoo and Netflix go up and down completely randomly.
Pair Corralation between Travelzoo and Netflix
Given the investment horizon of 90 days Travelzoo is expected to generate 8.73 times less return on investment than Netflix. In addition to that, Travelzoo is 1.6 times more volatile than Netflix. It trades about 0.03 of its total potential returns per unit of risk. Netflix is currently generating about 0.45 per unit of volatility. If you would invest 85,810 in Netflix on November 18, 2024 and sell it today you would earn a total of 20,050 from holding Netflix or generate 23.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Travelzoo vs. Netflix
Performance |
| Timeline |
| Travelzoo |
| Netflix |
Travelzoo and Netflix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelzoo and Netflix
The main advantage of trading using opposite Travelzoo and Netflix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelzoo 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.| Travelzoo vs. Dmc Global | Travelzoo vs. Air T Inc | Travelzoo vs. Deckers Outdoor | Travelzoo vs. Sonida Senior Living |
| 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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