Correlation Between Netflix and Soluna Holdings

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

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

Diversification Opportunities for Netflix and Soluna Holdings

0.18

Correlation Coefficient

Netflix  Soluna Holdings

Average diversification

The 3 months correlation between Netflix and Soluna is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Soluna Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soluna Holdings 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 Soluna Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soluna Holdings has no effect on the direction of Netflix i.e., Netflix and Soluna Holdings go up and down completely randomly.

Pair Corralation between Netflix and Soluna Holdings

Given the investment horizon of 90 days Netflix is expected to generate 0.25 times more return on investment than Soluna Holdings. However, Netflix is 3.99 times less risky than Soluna Holdings. It trades about 0.24 of its potential returns per unit of risk. Soluna Holdings is currently generating about 0.06 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	Insignificant
Accuracy	100.0%
Values	Daily Returns

Netflix  vs.  Soluna Holdings

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.

Soluna Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Soluna Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Soluna Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Netflix and Soluna Holdings

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

The idea behind Netflix and Soluna Holdings 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.