Correlation Between Netflix and Global

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

By analyzing existing cross correlation between Netflix and Global Payments 415, you can compare the effects of market volatilities on Netflix and Global 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 Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Global.

Diversification Opportunities for Netflix and Global

-0.11

Correlation Coefficient

Netflix  Global

Good diversification

The 3 months correlation between Netflix and Global is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Global Payments 415 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Payments 415 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 Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Payments 415 has no effect on the direction of Netflix i.e., Netflix and Global go up and down completely randomly.

Pair Corralation between Netflix and Global

Given the investment horizon of 90 days Netflix is expected to generate 1.76 times more return on investment than Global. However, Netflix is 1.76 times more volatile than Global Payments 415. It trades about 0.11 of its potential returns per unit of risk. Global Payments 415 is currently generating about 0.04 per unit of risk. If you would invest  88,681  in Netflix on November 29, 2024 and sell it today you would earn a total of  10,325  from holding Netflix or generate 11.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.53%
Values	Daily Returns

Netflix  vs.  Global Payments 415

Netflix

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Netflix are ranked lower than 8 (%) 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.

Global Payments 415

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global Payments 415 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Global is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Netflix and Global

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

The idea behind Netflix and Global Payments 415 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.