Correlation Between Zillow Group and Netflix
Can any of the company-specific risk be diversified away by investing in both Zillow Group 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 Zillow Group and Netflix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zillow Group Class and Netflix, you can compare the effects of market volatilities on Zillow Group 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 Zillow Group with a short position of Netflix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zillow Group and Netflix.
Diversification Opportunities for Zillow Group and Netflix
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Zillow and Netflix is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Zillow Group Class and Netflix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netflix and Zillow Group 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 Zillow Group Class 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 Zillow Group i.e., Zillow Group and Netflix go up and down completely randomly.
Pair Corralation between Zillow Group and Netflix
Taking into account the 90-day investment horizon Zillow Group Class is expected to generate 1.78 times more return on investment than Netflix. However, Zillow Group is 1.78 times more volatile than Netflix. It trades about 0.1 of its potential returns per unit of risk. Netflix is currently generating about 0.15 per unit of risk. If you would invest 4,336 in Zillow Group Class on August 27, 2024 and sell it today you would earn a total of 4,041 from holding Zillow Group Class or generate 93.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zillow Group Class vs. Netflix
Performance |
| Timeline |
| Zillow Group Class |
| Netflix |
Zillow Group and Netflix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zillow Group and Netflix
The main advantage of trading using opposite Zillow Group and Netflix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zillow Group 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.| Zillow Group vs. Pinterest | Zillow Group vs. Snap Inc | Zillow Group vs. Spotify Technology SA | Zillow Group vs. Twilio Inc |
| 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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