Correlation Between Netflix and SPDR SP
Can any of the company-specific risk be diversified away by investing in both Netflix and SPDR SP 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 SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and SPDR SP Telecom, you can compare the effects of market volatilities on Netflix and SPDR SP 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 SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and SPDR SP.
Diversification Opportunities for Netflix and SPDR SP
Very poor diversification
The 3 months correlation between Netflix and SPDR is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and SPDR SP Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Telecom 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 SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Telecom has no effect on the direction of Netflix i.e., Netflix and SPDR SP go up and down completely randomly.
Pair Corralation between Netflix and SPDR SP
Given the investment horizon of 90 days Netflix is expected to generate 2.0 times less return on investment than SPDR SP. In addition to that, Netflix is 1.39 times more volatile than SPDR SP Telecom. It trades about 0.13 of its total potential returns per unit of risk. SPDR SP Telecom is currently generating about 0.37 per unit of volatility. If you would invest 9,463 in SPDR SP Telecom on April 24, 2025 and sell it today you would earn a total of 2,614 from holding SPDR SP Telecom or generate 27.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Netflix vs. SPDR SP Telecom
Performance |
| Timeline |
| Netflix |
| SPDR SP Telecom |
Netflix and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and SPDR SP
The main advantage of trading using opposite Netflix and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, SPDR SP 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 SPDR SP will offset losses from the drop in SPDR SP's long position.| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
| SPDR SP vs. Fidelity MSCI Materials | SPDR SP vs. Fidelity MSCI Industrials | SPDR SP vs. Fidelity MSCI Consumer | SPDR SP vs. Fidelity MSCI Consumer |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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