Correlation Between Netflix and Bolloré SE

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

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

Diversification Opportunities for Netflix and Bolloré SE

-0.27

Correlation Coefficient

Netflix  Bolloré SE

Very good diversification

The 3 months correlation between Netflix and Bolloré is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Bollor SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bolloré SE 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 Bolloré SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bolloré SE has no effect on the direction of Netflix i.e., Netflix and Bolloré SE go up and down completely randomly.

Pair Corralation between Netflix and Bolloré SE

Given the investment horizon of 90 days Netflix is expected to generate 1.24 times more return on investment than Bolloré SE. However, Netflix is 1.24 times more volatile than Bollor SE. It trades about 0.05 of its potential returns per unit of risk. Bollor SE is currently generating about 0.03 per unit of risk. If you would invest  90,905  in Netflix on December 20, 2024 and sell it today you would earn a total of  5,044  from holding Netflix or generate 5.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Netflix  vs.  Bollor SE

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 April 2025.

Bolloré SE

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bollor SE are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Bolloré SE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Netflix and Bolloré SE

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

The idea behind Netflix and Bollor SE 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.