Correlation Between Netflix and IShares Healthcare

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

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

Diversification Opportunities for Netflix and IShares Healthcare

0.26

Correlation Coefficient

Netflix  IShares Healthcare

Modest diversification

The 3 months correlation between Netflix and IShares is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and iShares Healthcare Providers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Healthcare 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 IShares Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Healthcare has no effect on the direction of Netflix i.e., Netflix and IShares Healthcare go up and down completely randomly.

Pair Corralation between Netflix and IShares Healthcare

Given the investment horizon of 90 days Netflix is expected to generate 0.94 times more return on investment than IShares Healthcare. However, Netflix is 1.06 times less risky than IShares Healthcare. It trades about 0.02 of its potential returns per unit of risk. iShares Healthcare Providers is currently generating about -0.19 per unit of risk. If you would invest  115,541  in Netflix on May 7, 2025 and sell it today you would earn a total of  1,558  from holding Netflix or generate 1.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Netflix  vs.  iShares Healthcare Providers

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.

iShares Healthcare

Risk-Adjusted Performance

Weakest

Over the last 90 days iShares Healthcare Providers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Etf's technical indicators remain nearly stable which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long-run up-swing for the Exchange Traded Fund stockholders.

Pair Trading with Netflix and IShares Healthcare

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

The idea behind Netflix and iShares Healthcare Providers 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.