Correlation Between Fox Corp and Netflix

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

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

Diversification Opportunities for Fox Corp and Netflix

0.67

Correlation Coefficient

Fox Corp  Netflix

Poor diversification

The 3 months correlation between Fox and Netflix is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Fox Corp Class and Netflix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netflix and Fox Corp 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 Fox Corp 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 Fox Corp i.e., Fox Corp and Netflix go up and down completely randomly.

Pair Corralation between Fox Corp and Netflix

Considering the 90-day investment horizon Fox Corp Class is expected to generate 0.58 times more return on investment than Netflix. However, Fox Corp Class is 1.73 times less risky than Netflix. It trades about 0.08 of its potential returns per unit of risk. Netflix is currently generating about 0.03 per unit of risk. If you would invest  4,573  in Fox Corp Class on December 19, 2024 and sell it today you would earn a total of  272.00  from holding Fox Corp Class or generate 5.95% return on investment over 90 days.

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

Fox Corp Class  vs.  Netflix

Fox Corp Class

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fox Corp Class are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Fox Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Netflix

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Netflix are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong essential indicators, Netflix is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fox Corp and Netflix

The main advantage of trading using opposite Fox Corp and Netflix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fox Corp 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 Fox Corp Class 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.