Correlation Between Netflix and Ancora Microcap

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

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

Diversification Opportunities for Netflix and Ancora Microcap

0.16

Correlation Coefficient

Netflix  Ancora Microcap

Average diversification

The 3 months correlation between Netflix and Ancora is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Ancora Microcap Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ancora Microcap 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 Ancora Microcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ancora Microcap has no effect on the direction of Netflix i.e., Netflix and Ancora Microcap go up and down completely randomly.

Pair Corralation between Netflix and Ancora Microcap

Given the investment horizon of 90 days Netflix is expected to generate 2.63 times more return on investment than Ancora Microcap. However, Netflix is 2.63 times more volatile than Ancora Microcap Fund. It trades about 0.07 of its potential returns per unit of risk. Ancora Microcap Fund is currently generating about -0.08 per unit of risk. If you would invest  90,043  in Netflix on December 29, 2024 and sell it today you would earn a total of  7,629  from holding Netflix or generate 8.47% return on investment over 90 days.

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

Netflix  vs.  Ancora Microcap Fund

Netflix

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Netflix are ranked lower than 5 (%) 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 April 2025.

Ancora Microcap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ancora Microcap Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Ancora Microcap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Netflix and Ancora Microcap

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

The idea behind Netflix and Ancora Microcap Fund 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.