Correlation Between SAP SE and Netflix

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

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

Diversification Opportunities for SAP SE and Netflix

0.67

Correlation Coefficient

SAP SE  Netflix

Poor diversification

The 3 months correlation between SAP and Netflix is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding SAP SE and Netflix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netflix and SAP SE 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 SAP SE 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 SAP SE i.e., SAP SE and Netflix go up and down completely randomly.

Pair Corralation between SAP SE and Netflix

Assuming the 90 days trading horizon SAP SE is expected to generate 1.15 times more return on investment than Netflix. However, SAP SE is 1.15 times more volatile than Netflix. It trades about 0.16 of its potential returns per unit of risk. Netflix is currently generating about 0.15 per unit of risk. If you would invest  143,704  in SAP SE on April 22, 2025 and sell it today you would earn a total of  26,783  from holding SAP SE or generate 18.64% return on investment over 90 days.

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

SAP SE  vs.  Netflix

SAP SE

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SAP SE are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SAP SE sustained solid returns over the last few months and may actually be approaching a breakup point.

Netflix

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Netflix are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Netflix sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SAP SE and Netflix

The main advantage of trading using opposite SAP SE and Netflix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SAP SE 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 SAP SE 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.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.