Correlation Between Netflix and Franklin LibertyQ

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

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

Diversification Opportunities for Netflix and Franklin LibertyQ

0.14

Correlation Coefficient

Netflix  Franklin LibertyQ

Average diversification

The 3 months correlation between Netflix and Franklin is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Franklin LibertyQ Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin LibertyQ Equity 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 Franklin LibertyQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin LibertyQ Equity has no effect on the direction of Netflix i.e., Netflix and Franklin LibertyQ go up and down completely randomly.

Pair Corralation between Netflix and Franklin LibertyQ

Given the investment horizon of 90 days Netflix is expected to generate 3.0 times more return on investment than Franklin LibertyQ. However, Netflix is 3.0 times more volatile than Franklin LibertyQ Equity. It trades about -0.05 of its potential returns per unit of risk. Franklin LibertyQ Equity is currently generating about -0.15 per unit of risk. If you would invest  93,656  in Netflix on December 11, 2024 and sell it today you would lose (6,988) from holding Netflix or give up 7.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.72%
Values	Daily Returns

Netflix  vs.  Franklin LibertyQ Equity

Netflix

Risk-Adjusted Performance

Very Weak

Over the last 90 days Netflix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Franklin LibertyQ Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Franklin LibertyQ Equity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with Netflix and Franklin LibertyQ

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

The idea behind Netflix and Franklin LibertyQ Equity 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.