Correlation Between Netflix and Gol Linhas

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

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

Diversification Opportunities for Netflix and Gol Linhas

-0.51

Correlation Coefficient

Netflix  Gol Linhas

Excellent diversification

The 3 months correlation between Netflix and Gol is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Gol Linhas Areas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gol Linhas Areas 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 Gol Linhas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gol Linhas Areas has no effect on the direction of Netflix i.e., Netflix and Gol Linhas go up and down completely randomly.

Pair Corralation between Netflix and Gol Linhas

Assuming the 90 days trading horizon Netflix is expected to generate 0.58 times more return on investment than Gol Linhas. However, Netflix is 1.72 times less risky than Gol Linhas. It trades about 0.1 of its potential returns per unit of risk. Gol Linhas Areas is currently generating about -0.08 per unit of risk. If you would invest  1,895  in Netflix on February 4, 2024 and sell it today you would earn a total of  3,886  from holding Netflix or generate 205.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Netflix  vs.  Gol Linhas Areas

Netflix

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Netflix are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Netflix is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Gol Linhas Areas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gol Linhas Areas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Preferred Stock's basic indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Netflix and Gol Linhas

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

The idea behind Netflix and Gol Linhas Areas 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.