Correlation Between United Airlines and NetFlix

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Can any of the company-specific risk be diversified away by investing in both United Airlines 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 United Airlines and NetFlix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Airlines Holdings and NetFlix 4875 percent, you can compare the effects of market volatilities on United Airlines 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 United Airlines with a short position of NetFlix. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and NetFlix.

Diversification Opportunities for United Airlines and NetFlix

-0.26
  Correlation Coefficient

Very good diversification

The 3 months correlation between United and NetFlix is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and NetFlix 4875 percent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetFlix 4875 percent and United Airlines 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 United Airlines Holdings 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 4875 percent has no effect on the direction of United Airlines i.e., United Airlines and NetFlix go up and down completely randomly.

Pair Corralation between United Airlines and NetFlix

Considering the 90-day investment horizon United Airlines Holdings is expected to generate 2.62 times more return on investment than NetFlix. However, United Airlines is 2.62 times more volatile than NetFlix 4875 percent. It trades about 0.22 of its potential returns per unit of risk. NetFlix 4875 percent is currently generating about -0.15 per unit of risk. If you would invest  8,046  in United Airlines Holdings on November 1, 2024 and sell it today you would earn a total of  2,894  from holding United Airlines Holdings or generate 35.97% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy86.67%
ValuesDaily Returns

United Airlines Holdings  vs.  NetFlix 4875 percent

 Performance 
       Timeline  
United Airlines Holdings 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in United Airlines Holdings are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, United Airlines disclosed solid returns over the last few months and may actually be approaching a breakup point.
NetFlix 4875 percent 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days NetFlix 4875 percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for NetFlix 4875 percent investors.

United Airlines and NetFlix Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with United Airlines and NetFlix

The main advantage of trading using opposite United Airlines and NetFlix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines 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.
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The idea behind United Airlines Holdings and NetFlix 4875 percent pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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