Correlation Between RETAIL FOOD and Netflix

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

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

Diversification Opportunities for RETAIL FOOD and Netflix

0.0

Correlation Coefficient

RETAIL FOOD  Netflix

Pay attention - limited upside

The 3 months correlation between RETAIL and Netflix is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding RETAIL FOOD GROUP and Netflix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netflix and RETAIL FOOD 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 RETAIL FOOD GROUP 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 RETAIL FOOD i.e., RETAIL FOOD and Netflix go up and down completely randomly.

Pair Corralation between RETAIL FOOD and Netflix

Assuming the 90 days trading horizon RETAIL FOOD GROUP is expected to under-perform the Netflix. In addition to that, RETAIL FOOD is 1.67 times more volatile than Netflix. It trades about -0.14 of its total potential returns per unit of risk. Netflix is currently generating about 0.21 per unit of volatility. If you would invest  69,300  in Netflix on October 23, 2024 and sell it today you would earn a total of  14,380  from holding Netflix or generate 20.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

RETAIL FOOD GROUP  vs.  Netflix

RETAIL FOOD GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RETAIL FOOD GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Netflix

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Netflix are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Netflix reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RETAIL FOOD and Netflix

The main advantage of trading using opposite RETAIL FOOD and Netflix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RETAIL FOOD 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 RETAIL FOOD GROUP 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.