Correlation Between Beyond Meat and Netflix

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

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

Diversification Opportunities for Beyond Meat and Netflix

-0.88

Correlation Coefficient

Beyond Meat  Netflix

Pay attention - limited upside

The 3 months correlation between Beyond and Netflix is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Beyond Meat and Netflix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netflix and Beyond Meat 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 Beyond Meat 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 Beyond Meat i.e., Beyond Meat and Netflix go up and down completely randomly.

Pair Corralation between Beyond Meat and Netflix

Assuming the 90 days trading horizon Beyond Meat is expected to under-perform the Netflix. In addition to that, Beyond Meat is 2.13 times more volatile than Netflix. It trades about -0.18 of its total potential returns per unit of risk. Netflix is currently generating about 0.34 per unit of volatility. If you would invest  7,679  in Netflix on September 16, 2024 and sell it today you would earn a total of  3,563  from holding Netflix or generate 46.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Beyond Meat  vs.  Netflix

Beyond Meat

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beyond Meat has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Netflix

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Netflix are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Netflix sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Beyond Meat and Netflix

The main advantage of trading using opposite Beyond Meat and Netflix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beyond Meat 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 Beyond Meat 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.