Correlation Between Netflix and GavYam Lands

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

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

Diversification Opportunities for Netflix and GavYam Lands

0.66

Correlation Coefficient

Netflix  GavYam Lands

Poor diversification

The 3 months correlation between Netflix and GavYam is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and GavYam Lands Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GavYam Lands 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 GavYam Lands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GavYam Lands Corp has no effect on the direction of Netflix i.e., Netflix and GavYam Lands go up and down completely randomly.

Pair Corralation between Netflix and GavYam Lands

Given the investment horizon of 90 days Netflix is expected to generate 1.6 times more return on investment than GavYam Lands. However, Netflix is 1.6 times more volatile than GavYam Lands Corp. It trades about 0.04 of its potential returns per unit of risk. GavYam Lands Corp is currently generating about 0.02 per unit of risk. If you would invest  90,043  in Netflix on December 30, 2024 and sell it today you would earn a total of  3,342  from holding Netflix or generate 3.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	83.87%
Values	Daily Returns

Netflix  vs.  GavYam Lands Corp

Netflix

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Netflix are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong essential indicators, Netflix is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

GavYam Lands Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GavYam Lands Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, GavYam Lands is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Netflix and GavYam Lands

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

The idea behind Netflix and GavYam Lands 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.