Correlation Between CANADIAN NORTH and Netflix

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

By analyzing existing cross correlation between CANADIAN NORTH RESOURCES and Netflix, you can compare the effects of market volatilities on CANADIAN NORTH 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 CANADIAN NORTH with a short position of Netflix. Check out your portfolio center. Please also check ongoing floating volatility patterns of CANADIAN NORTH and Netflix.

Diversification Opportunities for CANADIAN NORTH and Netflix

-0.61

Correlation Coefficient

CANADIAN NORTH  Netflix

Excellent diversification

The 3 months correlation between CANADIAN and Netflix is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding CANADIAN NORTH RESOURCES and Netflix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netflix and CANADIAN NORTH 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 CANADIAN NORTH RESOURCES 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 CANADIAN NORTH i.e., CANADIAN NORTH and Netflix go up and down completely randomly.

Pair Corralation between CANADIAN NORTH and Netflix

Assuming the 90 days horizon CANADIAN NORTH RESOURCES is expected to under-perform the Netflix. In addition to that, CANADIAN NORTH is 2.04 times more volatile than Netflix. It trades about -0.02 of its total potential returns per unit of risk. Netflix is currently generating about 0.1 per unit of volatility. If you would invest  29,950  in Netflix on September 4, 2024 and sell it today you would earn a total of  53,800  from holding Netflix or generate 179.63% return on investment over 90 days.

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

CANADIAN NORTH RESOURCES  vs.  Netflix

CANADIAN NORTH RESOURCES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CANADIAN NORTH RESOURCES has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CANADIAN NORTH is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Netflix

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Netflix are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Netflix reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CANADIAN NORTH and Netflix

The main advantage of trading using opposite CANADIAN NORTH and Netflix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CANADIAN NORTH 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.

The idea behind CANADIAN NORTH RESOURCES 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.

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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.