Correlation Between Netflix and Cineverse Corp

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

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

Diversification Opportunities for Netflix and Cineverse Corp

0.63

Correlation Coefficient

Netflix  Cineverse Corp

Poor diversification

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

Pair Corralation between Netflix and Cineverse Corp

Given the investment horizon of 90 days Netflix is expected to generate 0.53 times more return on investment than Cineverse Corp. However, Netflix is 1.87 times less risky than Cineverse Corp. It trades about 0.08 of its potential returns per unit of risk. Cineverse Corp is currently generating about -0.04 per unit of risk. If you would invest  90,755  in Netflix on December 27, 2024 and sell it today you would earn a total of  8,973  from holding Netflix or generate 9.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Netflix  vs.  Cineverse Corp

Netflix

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Netflix are ranked lower than 6 (%) 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.

Cineverse Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cineverse Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Netflix and Cineverse Corp

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

The idea behind Netflix and Cineverse Corp 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.