Correlation Between Netflix and Mcig

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

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

Diversification Opportunities for Netflix and Mcig

-0.01

Correlation Coefficient

Netflix  Mcig

Good diversification

The 3 months correlation between Netflix and Mcig is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Mcig Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mcig Inc 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 Mcig. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mcig Inc has no effect on the direction of Netflix i.e., Netflix and Mcig go up and down completely randomly.

Pair Corralation between Netflix and Mcig

Given the investment horizon of 90 days Netflix is expected to generate 2.53 times less return on investment than Mcig. But when comparing it to its historical volatility, Netflix is 5.63 times less risky than Mcig. It trades about 0.07 of its potential returns per unit of risk. Mcig Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  0.60  in Mcig Inc on December 28, 2024 and sell it today you would lose (0.16) from holding Mcig Inc or give up 26.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Netflix  vs.  Mcig Inc

Netflix

Risk-Adjusted Performance

Insignificant

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.

Mcig Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mcig Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting basic indicators, Mcig demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Netflix and Mcig

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

The idea behind Netflix and Mcig Inc 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.

Check out your portfolio center.

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 Global Correlations module to find global opportunities by holding instruments from different markets.