Correlation Between Netflix and Arizona Sonoran

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

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

Diversification Opportunities for Netflix and Arizona Sonoran

-0.63

Correlation Coefficient

Netflix  Arizona Sonoran

Excellent diversification

The 3 months correlation between Netflix and Arizona is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Arizona Sonoran Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arizona Sonoran Copper 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 Arizona Sonoran. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arizona Sonoran Copper has no effect on the direction of Netflix i.e., Netflix and Arizona Sonoran go up and down completely randomly.

Pair Corralation between Netflix and Arizona Sonoran

Given the investment horizon of 90 days Netflix is expected to generate 0.61 times more return on investment than Arizona Sonoran. However, Netflix is 1.64 times less risky than Arizona Sonoran. It trades about 0.19 of its potential returns per unit of risk. Arizona Sonoran Copper is currently generating about -0.06 per unit of risk. If you would invest  86,559  in Netflix on September 24, 2024 and sell it today you would earn a total of  4,346  from holding Netflix or generate 5.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Netflix  vs.  Arizona Sonoran Copper

Netflix

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Netflix are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady essential indicators, Netflix showed solid returns over the last few months and may actually be approaching a breakup point.

Arizona Sonoran Copper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arizona Sonoran Copper has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Netflix and Arizona Sonoran

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

The idea behind Netflix and Arizona Sonoran Copper 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.