Correlation Between Netflix and Colorado Bondshares

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

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

Diversification Opportunities for Netflix and Colorado Bondshares

0.76

Correlation Coefficient

Netflix  Colorado Bondshares

Poor diversification

The 3 months correlation between Netflix and Colorado is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Colorado Bondshares A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colorado Bondshares 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 Colorado Bondshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Colorado Bondshares has no effect on the direction of Netflix i.e., Netflix and Colorado Bondshares go up and down completely randomly.

Pair Corralation between Netflix and Colorado Bondshares

Given the investment horizon of 90 days Netflix is expected to generate 9.38 times more return on investment than Colorado Bondshares. However, Netflix is 9.38 times more volatile than Colorado Bondshares A. It trades about 0.26 of its potential returns per unit of risk. Colorado Bondshares A is currently generating about 0.15 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  24,976  from holding Netflix or generate 36.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Netflix  vs.  Colorado Bondshares A

Netflix

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Netflix are ranked lower than 20 (%) 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.

Colorado Bondshares

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Colorado Bondshares A are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Colorado Bondshares is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Netflix and Colorado Bondshares

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

The idea behind Netflix and Colorado Bondshares A 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.