Correlation Between Netflix and Schweiter Technologies

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

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

Diversification Opportunities for Netflix and Schweiter Technologies

0.49

Correlation Coefficient

Netflix  Schweiter Technologies

Very weak diversification

The 3 months correlation between Netflix and Schweiter is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Schweiter Technologies AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schweiter Technologies and Netflix 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 Netflix are associated (or correlated) with Schweiter Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schweiter Technologies has no effect on the direction of Netflix i.e., Netflix and Schweiter Technologies go up and down completely randomly.

Pair Corralation between Netflix and Schweiter Technologies

Given the investment horizon of 90 days Netflix is expected to generate 1.29 times more return on investment than Schweiter Technologies. However, Netflix is 1.29 times more volatile than Schweiter Technologies AG. It trades about 0.04 of its potential returns per unit of risk. Schweiter Technologies AG is currently generating about 0.03 per unit of risk. If you would invest  89,132  in Netflix on December 31, 2024 and sell it today you would earn a total of  4,253  from holding Netflix or generate 4.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.31%
Values	Daily Returns

Netflix  vs.  Schweiter Technologies AG

Netflix

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Netflix are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Netflix may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Schweiter Technologies

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Schweiter Technologies AG are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Schweiter Technologies is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Netflix and Schweiter Technologies

The main advantage of trading using opposite Netflix and Schweiter Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, Schweiter Technologies 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 Schweiter Technologies will offset losses from the drop in Schweiter Technologies' long position.

The idea behind Netflix and Schweiter Technologies AG 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.