Correlation Between Netflix and Public Packages

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

By analyzing existing cross correlation between Netflix and Public Packages Holdings, you can compare the effects of market volatilities on Netflix and Public Packages 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 Public Packages. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Public Packages.

Diversification Opportunities for Netflix and Public Packages

-0.11

Correlation Coefficient

Netflix  Public Packages

Good diversification

The 3 months correlation between Netflix and Public is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Public Packages Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Packages Holdings 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 Public Packages. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Public Packages Holdings has no effect on the direction of Netflix i.e., Netflix and Public Packages go up and down completely randomly.

Pair Corralation between Netflix and Public Packages

Given the investment horizon of 90 days Netflix is expected to generate 1.78 times more return on investment than Public Packages. However, Netflix is 1.78 times more volatile than Public Packages Holdings. It trades about 0.04 of its potential returns per unit of risk. Public Packages Holdings is currently generating about -0.14 per unit of risk. If you would invest  90,043  in Netflix on December 30, 2024 and sell it today you would earn a total of  3,342  from holding Netflix or generate 3.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Netflix  vs.  Public Packages Holdings

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.

Public Packages Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Public Packages Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Netflix and Public Packages

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

The idea behind Netflix and Public Packages Holdings 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.