Correlation Between Netflix and Vanguard STAR
Can any of the company-specific risk be diversified away by investing in both Netflix and Vanguard STAR 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 Vanguard STAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and Vanguard STAR Funds, you can compare the effects of market volatilities on Netflix and Vanguard STAR 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 Vanguard STAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Vanguard STAR.
Diversification Opportunities for Netflix and Vanguard STAR
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Netflix and Vanguard is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Vanguard STAR Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard STAR Funds 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 Vanguard STAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard STAR Funds has no effect on the direction of Netflix i.e., Netflix and Vanguard STAR go up and down completely randomly.
Pair Corralation between Netflix and Vanguard STAR
Given the investment horizon of 90 days Netflix is expected to generate 1.15 times more return on investment than Vanguard STAR. However, Netflix is 1.15 times more volatile than Vanguard STAR Funds. It trades about 0.24 of its potential returns per unit of risk. Vanguard STAR Funds is currently generating about 0.02 per unit of risk. If you would invest 68,680 in Netflix on September 12, 2024 and sell it today you would earn a total of 22,655 from holding Netflix or generate 32.99% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 95.31% |
Values | Daily Returns |
Netflix vs. Vanguard STAR Funds
Performance |
Timeline |
Netflix |
Vanguard STAR Funds |
Netflix and Vanguard STAR Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Netflix and Vanguard STAR
The main advantage of trading using opposite Netflix and Vanguard STAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, Vanguard STAR 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 Vanguard STAR will offset losses from the drop in Vanguard STAR's long position.Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
Vanguard STAR vs. Vanguard Funds Public | Vanguard STAR vs. Vanguard Specialized Funds | Vanguard STAR vs. Vanguard World | Vanguard STAR vs. Vanguard Index Funds |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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