Correlation Between Netflix and Mitsubishi UFJ

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

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

Diversification Opportunities for Netflix and Mitsubishi UFJ

0.25

Correlation Coefficient

Netflix  Mitsubishi UFJ

Modest diversification

The 3 months correlation between Netflix and Mitsubishi is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Mitsubishi UFJ Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi UFJ Financial 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 Mitsubishi UFJ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi UFJ Financial has no effect on the direction of Netflix i.e., Netflix and Mitsubishi UFJ go up and down completely randomly.

Pair Corralation between Netflix and Mitsubishi UFJ

Assuming the 90 days trading horizon Netflix is expected to generate 0.81 times more return on investment than Mitsubishi UFJ. However, Netflix is 1.23 times less risky than Mitsubishi UFJ. It trades about 0.06 of its potential returns per unit of risk. Mitsubishi UFJ Financial is currently generating about 0.02 per unit of risk. If you would invest  10,876  in Netflix on December 2, 2024 and sell it today you would earn a total of  615.00  from holding Netflix or generate 5.65% 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.  Mitsubishi UFJ Financial

Netflix

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Netflix are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Netflix may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Mitsubishi UFJ Financial

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsubishi UFJ Financial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Mitsubishi UFJ is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Netflix and Mitsubishi UFJ

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

The idea behind Netflix and Mitsubishi UFJ Financial 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.