Correlation Between Netflix and IO Biotech
Can any of the company-specific risk be diversified away by investing in both Netflix and IO Biotech 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 IO Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and IO Biotech, you can compare the effects of market volatilities on Netflix and IO Biotech 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 IO Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and IO Biotech.
Diversification Opportunities for Netflix and IO Biotech
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Netflix and IOBT is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and IO Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IO Biotech 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 IO Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IO Biotech has no effect on the direction of Netflix i.e., Netflix and IO Biotech go up and down completely randomly.
Pair Corralation between Netflix and IO Biotech
Given the investment horizon of 90 days Netflix is expected to generate 2.66 times less return on investment than IO Biotech. But when comparing it to its historical volatility, Netflix is 1.74 times less risky than IO Biotech. It trades about 0.07 of its potential returns per unit of risk. IO Biotech is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 94.00 in IO Biotech on December 28, 2024 and sell it today you would earn a total of 22.00 from holding IO Biotech or generate 23.4% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Netflix vs. IO Biotech
Performance |
Timeline |
Netflix |
IO Biotech |
Netflix and IO Biotech Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Netflix and IO Biotech
The main advantage of trading using opposite Netflix and IO Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, IO Biotech 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 IO Biotech will offset losses from the drop in IO Biotech's long position.Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
IO Biotech vs. Pmv Pharmaceuticals | IO Biotech vs. MediciNova | IO Biotech vs. Pharvaris BV | IO Biotech vs. PepGen |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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