Correlation Between Under Armour and Netflix

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

Diversification Opportunities for Under Armour and Netflix

0.15
  Correlation Coefficient

Average diversification

The 3 months correlation between Under and Netflix is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Under Armour Inc and Netflix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netflix and Under Armour 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 Under Armour 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 Under Armour i.e., Under Armour and Netflix go up and down completely randomly.

Pair Corralation between Under Armour and Netflix

Allowing for the 90-day total investment horizon Under Armour is expected to under-perform the Netflix. In addition to that, Under Armour is 1.14 times more volatile than Netflix. It trades about -0.12 of its total potential returns per unit of risk. Netflix is currently generating about 0.14 per unit of volatility. If you would invest  21,839  in Netflix on July 7, 2022 and sell it today you would earn a total of  2,235  from holding Netflix or generate 10.23% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Under Armour Inc  vs.  Netflix

 Performance (%) 
       Timeline  
Under Armour 
Under Performance
0 of 100
Over the last 90 days Under Armour has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in November 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Under Price Channel

Netflix 
Netflix Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Netflix are ranked lower than 10 (%) 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

Under Armour and Netflix Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Under Armour and Netflix

The main advantage of trading using opposite Under Armour and Netflix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Under Armour 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.
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The idea behind Under Armour 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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