Correlation Between Netflix and VanEck ETF

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

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

Diversification Opportunities for Netflix and VanEck ETF

0.92

Correlation Coefficient

Netflix  VanEck ETF

Almost no diversification

The 3 months correlation between Netflix and VanEck is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and VanEck ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck ETF Trust 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 VanEck ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck ETF Trust has no effect on the direction of Netflix i.e., Netflix and VanEck ETF go up and down completely randomly.

Pair Corralation between Netflix and VanEck ETF

Given the investment horizon of 90 days Netflix is expected to generate 33.56 times more return on investment than VanEck ETF. However, Netflix is 33.56 times more volatile than VanEck ETF Trust. It trades about 0.23 of its potential returns per unit of risk. VanEck ETF Trust is currently generating about 0.42 per unit of risk. If you would invest  67,968  in Netflix on September 4, 2024 and sell it today you would earn a total of  21,806  from holding Netflix or generate 32.08% return on investment over 90 days.

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

Netflix  vs.  VanEck ETF Trust

Netflix

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Netflix are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Netflix showed solid returns over the last few months and may actually be approaching a breakup point.

VanEck ETF Trust

Risk-Adjusted Performance

32 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck ETF Trust are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, VanEck ETF is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Netflix and VanEck ETF

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

The idea behind Netflix and VanEck ETF Trust 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.