Correlation Between Netflix and Harvest Tech

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

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

Diversification Opportunities for Netflix and Harvest Tech

0.76

Correlation Coefficient

Netflix  Harvest Tech

Poor diversification

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

Pair Corralation between Netflix and Harvest Tech

Given the investment horizon of 90 days Netflix is expected to generate 1.09 times more return on investment than Harvest Tech. However, Netflix is 1.09 times more volatile than Harvest Tech Achievers. It trades about 0.15 of its potential returns per unit of risk. Harvest Tech Achievers is currently generating about 0.04 per unit of risk. If you would invest  66,938  in Netflix on September 12, 2024 and sell it today you would earn a total of  24,397  from holding Netflix or generate 36.45% return on investment over 90 days.

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

Netflix  vs.  Harvest Tech Achievers

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.

Harvest Tech Achievers

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Harvest Tech Achievers are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Harvest Tech may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Netflix and Harvest Tech

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

The idea behind Netflix and Harvest Tech Achievers 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.