Correlation Between Apartment Investment and Netflix

Can any of the company-specific risk be diversified away by investing in both Apartment Investment 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 Apartment Investment and Netflix into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Apartment Investment and and Netflix, you can compare the effects of market volatilities on Apartment Investment 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 Apartment Investment with a short position of Netflix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apartment Investment and Netflix.

Diversification Opportunities for Apartment Investment and Netflix

0.75

Correlation Coefficient

Apartment Investment  Netflix

Poor diversification

The 3 months correlation between Apartment and Netflix is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Apartment Investment and and Netflix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netflix and Apartment Investment 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 Apartment Investment and 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 Apartment Investment i.e., Apartment Investment and Netflix go up and down completely randomly.

Pair Corralation between Apartment Investment and Netflix

Assuming the 90 days trading horizon Apartment Investment and is expected to generate 3.66 times more return on investment than Netflix. However, Apartment Investment is 3.66 times more volatile than Netflix. It trades about -0.06 of its potential returns per unit of risk. Netflix is currently generating about -0.34 per unit of risk. If you would invest  5,006  in Apartment Investment and on October 13, 2024 and sell it today you would lose (406.00) from holding Apartment Investment and or give up 8.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Apartment Investment and  vs.  Netflix

Apartment Investment and

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Apartment Investment and are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Apartment Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Netflix

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Netflix are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Netflix sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apartment Investment and Netflix

The main advantage of trading using opposite Apartment Investment and Netflix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apartment Investment 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.

The idea behind Apartment Investment and and Netflix 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 Transaction History module to view history of all your transactions and understand their impact on performance.