Correlation Between Netflix and Polar Capital

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

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

Diversification Opportunities for Netflix and Polar Capital

-0.27

Correlation Coefficient

Netflix  Polar Capital

Very good diversification

The 3 months correlation between Netflix and Polar is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Polar Capital Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polar Capital Emerging 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 Polar Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polar Capital Emerging has no effect on the direction of Netflix i.e., Netflix and Polar Capital go up and down completely randomly.

Pair Corralation between Netflix and Polar Capital

Given the investment horizon of 90 days Netflix is expected to generate 2.16 times more return on investment than Polar Capital. However, Netflix is 2.16 times more volatile than Polar Capital Emerging. It trades about 0.12 of its potential returns per unit of risk. Polar Capital Emerging is currently generating about 0.05 per unit of risk. If you would invest  29,796  in Netflix on September 11, 2024 and sell it today you would earn a total of  61,573  from holding Netflix or generate 206.65% return on investment over 90 days.

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

Netflix  vs.  Polar Capital Emerging

Netflix

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Netflix are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Netflix showed solid returns over the last few months and may actually be approaching a breakup point.

Polar Capital Emerging

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Polar Capital Emerging are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Polar Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Netflix and Polar Capital

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

The idea behind Netflix and Polar Capital Emerging 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.