Correlation Between Netflix and SentinelOne
Can any of the company-specific risk be diversified away by investing in both Netflix and SentinelOne 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 SentinelOne into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and SentinelOne, you can compare the effects of market volatilities on Netflix and SentinelOne 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 SentinelOne. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and SentinelOne.
Diversification Opportunities for Netflix and SentinelOne
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Netflix and SentinelOne is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and SentinelOne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SentinelOne 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 SentinelOne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SentinelOne has no effect on the direction of Netflix i.e., Netflix and SentinelOne go up and down completely randomly.
Pair Corralation between Netflix and SentinelOne
Given the investment horizon of 90 days Netflix is expected to generate 0.55 times more return on investment than SentinelOne. However, Netflix is 1.82 times less risky than SentinelOne. It trades about -0.01 of its potential returns per unit of risk. SentinelOne is currently generating about -0.07 per unit of risk. If you would invest 57,042 in Netflix on January 26, 2024 and sell it today you would lose (1,530) from holding Netflix or give up 2.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Netflix vs. SentinelOne
Performance |
| Timeline |
| Netflix |
| SentinelOne |
Netflix and SentinelOne Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and SentinelOne
The main advantage of trading using opposite Netflix and SentinelOne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, SentinelOne 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 SentinelOne will offset losses from the drop in SentinelOne's long position.| Netflix vs. Roku Inc | Netflix vs. Paramount Global Class | Netflix vs. Warner Bros Discovery | Netflix vs. Paramount Global Class |
| SentinelOne vs. Crowdstrike Holdings | SentinelOne vs. Okta Inc | SentinelOne vs. Cloudflare | SentinelOne vs. MongoDB |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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