Correlation Between Netflix and Johcm International

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

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

Diversification Opportunities for Netflix and Johcm International

0.29

Correlation Coefficient

Netflix  Johcm International

Modest diversification

The 3 months correlation between Netflix and Johcm is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Johcm International Opportunit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johcm International 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 Johcm International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johcm International has no effect on the direction of Netflix i.e., Netflix and Johcm International go up and down completely randomly.

Pair Corralation between Netflix and Johcm International

Given the investment horizon of 90 days Netflix is expected to generate 1.2 times less return on investment than Johcm International. In addition to that, Netflix is 2.79 times more volatile than Johcm International Opportunities. It trades about 0.07 of its total potential returns per unit of risk. Johcm International Opportunities is currently generating about 0.22 per unit of volatility. If you would invest  1,176  in Johcm International Opportunities on December 29, 2024 and sell it today you would earn a total of  146.00  from holding Johcm International Opportunities or generate 12.41% return on investment over 90 days.

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

Netflix  vs.  Johcm International Opportunit

Netflix

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Netflix are ranked lower than 5 (%) 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.

Johcm International

Risk-Adjusted Performance

Solid

Over the last 90 days Johcm International Opportunities has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly weak basic indicators, Johcm International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Netflix and Johcm International

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

The idea behind Netflix and Johcm International Opportunities 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.