Correlation Between Charles Schwab and Netflix

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Can any of the company-specific risk be diversified away by investing in both Charles Schwab 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 Charles Schwab and Netflix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Charles Schwab and Netflix, you can compare the effects of market volatilities on Charles Schwab 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 Charles Schwab with a short position of Netflix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charles Schwab and Netflix.

Diversification Opportunities for Charles Schwab and Netflix

0.81
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Charles and Netflix is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding The Charles Schwab and Netflix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netflix and Charles Schwab 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 The Charles Schwab 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 Charles Schwab i.e., Charles Schwab and Netflix go up and down completely randomly.

Pair Corralation between Charles Schwab and Netflix

Given the investment horizon of 90 days The Charles Schwab is expected to generate 0.66 times more return on investment than Netflix. However, The Charles Schwab is 1.52 times less risky than Netflix. It trades about 0.08 of its potential returns per unit of risk. Netflix is currently generating about -0.03 per unit of risk. If you would invest  3,802  in The Charles Schwab on July 9, 2022 and sell it today you would earn a total of  3,797  from holding The Charles Schwab or generate 99.87% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy99.8%
ValuesDaily Returns

The Charles Schwab  vs.  Netflix

 Performance (%) 
       Timeline  
Charles Schwab 
Charles Performance
12 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in The Charles Schwab are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting technical indicators, Charles Schwab showed solid returns over the last few months and may actually be approaching a breakup point.

Charles Price Channel

Netflix 
Netflix Performance
12 of 100
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. In spite of fairly abnormal essential indicators, Netflix showed solid returns over the last few months and may actually be approaching a breakup point.

Netflix Price Channel

Charles Schwab and Netflix Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Charles Schwab and Netflix

The main advantage of trading using opposite Charles Schwab and Netflix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charles Schwab 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.
Charles Schwab vs. Amazon Inc
The idea behind The Charles Schwab 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.
Netflix vs. Live Nation Entertainment
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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