Correlation Between Netflix and Manhattan Bridge

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

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

Diversification Opportunities for Netflix and Manhattan Bridge

0.31

Correlation Coefficient

Netflix  Manhattan Bridge

Weak diversification

The 3 months correlation between Netflix and Manhattan is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Manhattan Bridge Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manhattan Bridge Capital 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 Manhattan Bridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manhattan Bridge Capital has no effect on the direction of Netflix i.e., Netflix and Manhattan Bridge go up and down completely randomly.

Pair Corralation between Netflix and Manhattan Bridge

Given the investment horizon of 90 days Netflix is expected to generate 2.08 times more return on investment than Manhattan Bridge. However, Netflix is 2.08 times more volatile than Manhattan Bridge Capital. It trades about 0.04 of its potential returns per unit of risk. Manhattan Bridge Capital is currently generating about 0.05 per unit of risk. If you would invest  90,043  in Netflix on December 29, 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	Very Weak
Accuracy	100.0%
Values	Daily Returns

Netflix  vs.  Manhattan Bridge Capital

Netflix

Risk-Adjusted Performance

Modest

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.

Manhattan Bridge Capital

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Manhattan Bridge Capital are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Manhattan Bridge is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Netflix and Manhattan Bridge

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

The idea behind Netflix and Manhattan Bridge Capital 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.