Correlation Between Netflix and Growth For

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

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

Diversification Opportunities for Netflix and Growth For

0.93

Correlation Coefficient

Netflix  Growth For

Almost no diversification

The 3 months correlation between Netflix and Growth is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Growth For Good in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth For Good 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 Growth For. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth For Good has no effect on the direction of Netflix i.e., Netflix and Growth For go up and down completely randomly.

Pair Corralation between Netflix and Growth For

Given the investment horizon of 90 days Netflix is expected to generate 13.12 times more return on investment than Growth For. However, Netflix is 13.12 times more volatile than Growth For Good. It trades about 0.1 of its potential returns per unit of risk. Growth For Good is currently generating about 0.18 per unit of risk. If you would invest  35,742  in Netflix on September 12, 2024 and sell it today you would earn a total of  55,593  from holding Netflix or generate 155.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	26.47%
Values	Daily Returns

Netflix  vs.  Growth For Good

Netflix

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Netflix are ranked lower than 18 (%) 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.

Growth For Good

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Growth For Good has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Growth For is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Netflix and Growth For

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

The idea behind Netflix and Growth For Good 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.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.