Correlation Between Netflix and Kesselrun Resources

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

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

Diversification Opportunities for Netflix and Kesselrun Resources

0.52

Correlation Coefficient

Netflix  Kesselrun Resources

Very weak diversification

The 3 months correlation between Netflix and Kesselrun is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Kesselrun Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kesselrun Resources 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 Kesselrun Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kesselrun Resources has no effect on the direction of Netflix i.e., Netflix and Kesselrun Resources go up and down completely randomly.

Pair Corralation between Netflix and Kesselrun Resources

Given the investment horizon of 90 days Netflix is expected to generate 1.12 times less return on investment than Kesselrun Resources. But when comparing it to its historical volatility, Netflix is 4.7 times less risky than Kesselrun Resources. It trades about 0.08 of its potential returns per unit of risk. Kesselrun Resources is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  4.00  in Kesselrun Resources on December 1, 2024 and sell it today you would lose (0.50) from holding Kesselrun Resources or give up 12.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Netflix  vs.  Kesselrun Resources

Netflix

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Netflix are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Netflix may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Kesselrun Resources

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kesselrun Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Kesselrun Resources may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Netflix and Kesselrun Resources

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

The idea behind Netflix and Kesselrun Resources 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.