Correlation Between Netflix and Meta Platforms
Can any of the company-specific risk be diversified away by investing in both Netflix and Meta Platforms 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 Meta Platforms into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and Meta Platforms, you can compare the effects of market volatilities on Netflix and Meta Platforms 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 Meta Platforms. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Meta Platforms.
Diversification Opportunities for Netflix and Meta Platforms
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Netflix and Meta is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Meta Platforms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Platforms 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 Meta Platforms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meta Platforms has no effect on the direction of Netflix i.e., Netflix and Meta Platforms go up and down completely randomly.
Pair Corralation between Netflix and Meta Platforms
If you would invest 34,675 in Netflix on December 30, 2023 and sell it today you would earn a total of 26,058 from holding Netflix or generate 75.15% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 0.4% |
Values | Daily Returns |
Netflix vs. Meta Platforms
Performance |
Timeline |
Netflix |
Meta Platforms |
Risk-Adjusted Performance
0 of 100
Low | High |
Very Weak
Netflix and Meta Platforms Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Netflix and Meta Platforms
The main advantage of trading using opposite Netflix and Meta Platforms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, Meta Platforms 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 Meta Platforms will offset losses from the drop in Meta Platforms' long position.Netflix vs. Anghami Warrants | Netflix vs. Alliance Entertainment Holding | Netflix vs. News Corp A | Netflix vs. Nexstar Broadcasting Group |
Meta Platforms vs. Amgen Inc | Meta Platforms vs. Apogee Enterprises | Meta Platforms vs. Simpson Manufacturing | Meta Platforms vs. Western Digital |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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