Correlation Between Netflix and Tegna

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

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

Diversification Opportunities for Netflix and Tegna

-0.06

Correlation Coefficient

Netflix  Tegna

Good diversification

The 3 months correlation between Netflix and Tegna is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Tegna Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tegna Inc 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 Tegna. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tegna Inc has no effect on the direction of Netflix i.e., Netflix and Tegna go up and down completely randomly.

Pair Corralation between Netflix and Tegna

Given the investment horizon of 90 days Netflix is expected to under-perform the Tegna. In addition to that, Netflix is 1.52 times more volatile than Tegna Inc. It trades about -0.12 of its total potential returns per unit of risk. Tegna Inc is currently generating about 0.01 per unit of volatility. If you would invest  1,414  in Tegna Inc on February 7, 2024 and sell it today you would earn a total of  3.00  from holding Tegna Inc or generate 0.21% return on investment over 90 days.

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

Netflix  vs.  Tegna Inc

Netflix

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Netflix are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong essential indicators, Netflix is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Tegna Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tegna Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Tegna 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 Tegna

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

The idea behind Netflix and Tegna Inc 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.