Correlation Between Netflix and Innovator ETFs

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

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

Diversification Opportunities for Netflix and Innovator ETFs

0.95

Correlation Coefficient

Netflix  Innovator ETFs

Almost no diversification

The 3 months correlation between Netflix and Innovator is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Innovator ETFs Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator ETFs Trust 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 Innovator ETFs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator ETFs Trust has no effect on the direction of Netflix i.e., Netflix and Innovator ETFs go up and down completely randomly.

Pair Corralation between Netflix and Innovator ETFs

Given the investment horizon of 90 days Netflix is expected to generate 1.92 times more return on investment than Innovator ETFs. However, Netflix is 1.92 times more volatile than Innovator ETFs Trust. It trades about 0.24 of its potential returns per unit of risk. Innovator ETFs Trust is currently generating about 0.24 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 Strong
Accuracy	100.0%
Values	Daily Returns

Netflix  vs.  Innovator ETFs Trust

Netflix

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Netflix are ranked lower than 19 (%) 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.

Innovator ETFs Trust

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator ETFs Trust are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Innovator ETFs unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Netflix and Innovator ETFs

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

The idea behind Netflix and Innovator ETFs Trust 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.