Correlation Between Netflix and Profunds Ultrashort
Can any of the company-specific risk be diversified away by investing in both Netflix and Profunds Ultrashort 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 Profunds Ultrashort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and Profunds Ultrashort Nasdaq 100, you can compare the effects of market volatilities on Netflix and Profunds Ultrashort 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 Profunds Ultrashort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Profunds Ultrashort.
Diversification Opportunities for Netflix and Profunds Ultrashort
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Netflix and Profunds is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Profunds Ultrashort Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Profunds Ultrashort 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 Profunds Ultrashort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Profunds Ultrashort has no effect on the direction of Netflix i.e., Netflix and Profunds Ultrashort go up and down completely randomly.
Pair Corralation between Netflix and Profunds Ultrashort
Given the investment horizon of 90 days Netflix is expected to generate 0.79 times more return on investment than Profunds Ultrashort. However, Netflix is 1.26 times less risky than Profunds Ultrashort. It trades about 0.08 of its potential returns per unit of risk. Profunds Ultrashort Nasdaq 100 is currently generating about 0.03 per unit of risk. If you would invest 89,774 in Netflix on December 2, 2024 and sell it today you would earn a total of 8,282 from holding Netflix or generate 9.23% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Netflix vs. Profunds Ultrashort Nasdaq 100
Performance |
Timeline |
Netflix |
Profunds Ultrashort |
Netflix and Profunds Ultrashort Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Netflix and Profunds Ultrashort
The main advantage of trading using opposite Netflix and Profunds Ultrashort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, Profunds Ultrashort 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 Profunds Ultrashort will offset losses from the drop in Profunds Ultrashort's long position.Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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