Correlation Between Netflix and Este Lauder

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

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

Diversification Opportunities for Netflix and Este Lauder

0.48

Correlation Coefficient

Netflix  Este Lauder

Very weak diversification

The 3 months correlation between Netflix and Este is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and The Este Lauder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Este Lauder 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 Este Lauder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Este Lauder has no effect on the direction of Netflix i.e., Netflix and Este Lauder go up and down completely randomly.

Pair Corralation between Netflix and Este Lauder

Given the investment horizon of 90 days Netflix is expected to generate 20.94 times less return on investment than Este Lauder. But when comparing it to its historical volatility, Netflix is 1.65 times less risky than Este Lauder. It trades about 0.02 of its potential returns per unit of risk. The Este Lauder is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  5,173  in The Este Lauder on May 7, 2025 and sell it today you would earn a total of  2,827  from holding The Este Lauder or generate 54.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.31%
Values	Daily Returns

Netflix  vs.  The Este Lauder

Netflix

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Netflix are ranked lower than 1 (%) 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 latest stock price disturbance, may contribute to short-term losses for the investors.

Este Lauder

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Este Lauder are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Este Lauder demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Netflix and Este Lauder

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

The idea behind Netflix and The Este Lauder 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..