Netflix Stock Analysis: Beta Regression + Efficient Frontier (with Microsoft)

Overview

Analyzed Netflix stock risk/return vs. the market and constructed a two-asset efficient frontier with Microsoft. Data: 156-week period ending Oct 7, 2024.

Business Questions

• How sensitive is Netflix to overall market movements (beta)?
• What risk/return tradeoff can an investor achieve by combining Netflix with Microsoft?

Key Results

• Beta (Netflix vs. Wilshire 5000): 1.62
• Beta (Microsoft vs. Wilshire 5000): 1.09
• Built an efficient frontier showing optimal risk-return allocations of Netflix + Microsoft.

Method (Excel-first)

• Collected weekly adjusted close prices (Yahoo Finance) and computed weekly returns
• Ran regression of stock returns vs. Wilshire 5000 returns to estimate beta
• Estimated expected returns using: Risk-free rate (4.875%) + Beta × Equity risk premium (7.8%)
• Computed portfolio return and volatility across weight allocations and plotted the efficient frontier

Artifacts

• Report: docs/Analysing_Company_Stock.pdf
• Excel model: docs/Analysing_Company_Stock.xlsx
• Figures: assets/regression_beta.png, assets/efficient_frontier.png

Notes

Completed as part of a Corporate Finance course assignment.