Correlation Between WRIT Media and Netflix

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

By analyzing existing cross correlation between WRIT Media Group and Netflix, you can compare the effects of market volatilities on WRIT Media and Netflix 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 WRIT Media with a short position of Netflix. Check out your portfolio center. Please also check ongoing floating volatility patterns of WRIT Media and Netflix.

Diversification Opportunities for WRIT Media and Netflix

-0.54

Correlation Coefficient

WRIT Media  Netflix

Excellent diversification

The 3 months correlation between WRIT and Netflix is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding WRIT Media Group and Netflix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netflix and WRIT Media 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 WRIT Media Group are associated (or correlated) with Netflix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netflix has no effect on the direction of WRIT Media i.e., WRIT Media and Netflix go up and down completely randomly.

Pair Corralation between WRIT Media and Netflix

Given the investment horizon of 90 days WRIT Media Group is expected to generate 8.07 times more return on investment than Netflix. However, WRIT Media is 8.07 times more volatile than Netflix. It trades about 0.06 of its potential returns per unit of risk. Netflix is currently generating about 0.11 per unit of risk. If you would invest  1.03  in WRIT Media Group on October 9, 2024 and sell it today you would lose (0.82) from holding WRIT Media Group or give up 79.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

WRIT Media Group  vs.  Netflix

WRIT Media Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WRIT Media Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating forward indicators, WRIT Media unveiled solid returns over the last few months and may actually be approaching a breakup point.

Netflix

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Netflix are ranked lower than 13 (%) 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.

Pair Trading with WRIT Media and Netflix

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

The idea behind WRIT Media Group and Netflix 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.