Correlation Between Netflix and Ivy Natural

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

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

Diversification Opportunities for Netflix and Ivy Natural

0.5

Correlation Coefficient

Netflix  Ivy Natural

Very weak diversification

The 3 months correlation between Netflix and Ivy is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Ivy Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivy Natural Resources 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 Ivy Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivy Natural Resources has no effect on the direction of Netflix i.e., Netflix and Ivy Natural go up and down completely randomly.

Pair Corralation between Netflix and Ivy Natural

Given the investment horizon of 90 days Netflix is expected to generate 1.68 times more return on investment than Ivy Natural. However, Netflix is 1.68 times more volatile than Ivy Natural Resources. It trades about 0.59 of its potential returns per unit of risk. Ivy Natural Resources is currently generating about 0.18 per unit of risk. If you would invest  75,551  in Netflix on September 5, 2024 and sell it today you would earn a total of  14,666  from holding Netflix or generate 19.41% return on investment over 90 days.

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

Netflix  vs.  Ivy Natural Resources

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.

Ivy Natural Resources

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ivy Natural Resources are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Ivy Natural may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Netflix and Ivy Natural

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

The idea behind Netflix and Ivy Natural Resources 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.