Correlation Between Netflix and Money Market
Can any of the company-specific risk be diversified away by investing in both Netflix and Money Market 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 Money Market into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and Money Market Obligations, you can compare the effects of market volatilities on Netflix and Money Market 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 Money Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Money Market.
Diversification Opportunities for Netflix and Money Market
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Netflix and Money is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Money Market Obligations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Money Market Obligations 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 Money Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Money Market Obligations has no effect on the direction of Netflix i.e., Netflix and Money Market go up and down completely randomly.
Pair Corralation between Netflix and Money Market
Given the investment horizon of 90 days Netflix is expected to generate 15.32 times more return on investment than Money Market. However, Netflix is 15.32 times more volatile than Money Market Obligations. It trades about 0.25 of its potential returns per unit of risk. Money Market Obligations is currently generating about 0.13 per unit of risk. If you would invest 68,147 in Netflix on September 11, 2024 and sell it today you would earn a total of 23,222 from holding Netflix or generate 34.08% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Netflix vs. Money Market Obligations
Performance |
Timeline |
Netflix |
Money Market Obligations |
Netflix and Money Market Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Netflix and Money Market
The main advantage of trading using opposite Netflix and Money Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, Money Market 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 Money Market will offset losses from the drop in Money Market's long position.Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
Money Market vs. Small Cap Stock | Money Market vs. Federated High Yield | Money Market vs. Omni Small Cap Value | Money Market vs. Growth Fund C |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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