Correlation Between Netflix and WCF Bancorp

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

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

Diversification Opportunities for Netflix and WCF Bancorp

0.4

Correlation Coefficient

Netflix  WCF Bancorp

Very weak diversification

The 3 months correlation between Netflix and WCF is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and WCF Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WCF Bancorp 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 WCF Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WCF Bancorp has no effect on the direction of Netflix i.e., Netflix and WCF Bancorp go up and down completely randomly.

Pair Corralation between Netflix and WCF Bancorp

If you would invest  60,957  in Netflix on September 5, 2024 and sell it today you would earn a total of  29,260  from holding Netflix or generate 48.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.18%
Values	Daily Returns

Netflix  vs.  WCF Bancorp

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.

WCF Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WCF Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, WCF Bancorp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Netflix and WCF Bancorp

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

The idea behind Netflix and WCF Bancorp 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .