Correlation Between Marcus and Netflix

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

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

Diversification Opportunities for Marcus and Netflix

0.22

Correlation Coefficient

Marcus  Netflix

Modest diversification

The 3 months correlation between Marcus and Netflix is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Marcus and Netflix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netflix and Marcus 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 Marcus are associated (or correlated) with Netflix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netflix has no effect on the direction of Marcus i.e., Marcus and Netflix go up and down completely randomly.

Pair Corralation between Marcus and Netflix

Considering the 90-day investment horizon Marcus is expected to under-perform the Netflix. But the stock apears to be less risky and, when comparing its historical volatility, Marcus is 1.22 times less risky than Netflix. The stock trades about -0.31 of its potential returns per unit of risk. The Netflix is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  60,093  in Netflix on February 8, 2024 and sell it today you would earn a total of  507.00  from holding Netflix or generate 0.84% return on investment over 90 days.

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

Marcus  vs.  Netflix

Marcus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marcus 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 Stock's fundamental 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.

Netflix

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Netflix are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain essential indicators, Netflix may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Marcus and Netflix

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

The idea behind Marcus and Netflix 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.