Correlation Between Northern Lights and Netflix
Can any of the company-specific risk be diversified away by investing in both Northern Lights 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 Northern Lights and Netflix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Lights and Netflix, you can compare the effects of market volatilities on Northern Lights 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 Northern Lights with a short position of Netflix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Lights and Netflix.
Diversification Opportunities for Northern Lights and Netflix
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Northern and Netflix is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and Netflix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netflix and Northern Lights 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 Northern Lights 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 Northern Lights i.e., Northern Lights and Netflix go up and down completely randomly.
Pair Corralation between Northern Lights and Netflix
Given the investment horizon of 90 days Northern Lights is expected to generate 0.33 times more return on investment than Netflix. However, Northern Lights is 3.04 times less risky than Netflix. It trades about 0.02 of its potential returns per unit of risk. Netflix is currently generating about -0.08 per unit of risk. If you would invest 3,636 in Northern Lights on September 3, 2025 and sell it today you would earn a total of 23.00 from holding Northern Lights or generate 0.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Lights vs. Netflix
Performance |
| Timeline |
| Northern Lights |
| Netflix |
Northern Lights and Netflix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Lights and Netflix
The main advantage of trading using opposite Northern Lights and Netflix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Lights 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.| Northern Lights vs. Vanguard Growth Index | Northern Lights vs. iShares Russell 1000 | Northern Lights vs. SPDR Portfolio SP | Northern Lights vs. Vanguard Mega Cap |
| Netflix vs. FT Vest Equity | Netflix vs. Zillow Group Class | Netflix vs. Northern Lights | Netflix vs. VanEck Vectors Moodys |
Check out your portfolio center.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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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