Correlation Between Telus Corp and Netflix
Can any of the company-specific risk be diversified away by investing in both Telus Corp 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 Telus Corp and Netflix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telus Corp and Netflix, you can compare the effects of market volatilities on Telus Corp 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 Telus Corp with a short position of Netflix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telus Corp and Netflix.
Diversification Opportunities for Telus Corp and Netflix
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Telus and Netflix is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Telus Corp and Netflix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netflix and Telus Corp 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 Telus Corp 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 Telus Corp i.e., Telus Corp and Netflix go up and down completely randomly.
Pair Corralation between Telus Corp and Netflix
Allowing for the 90-day total investment horizon Telus Corp is expected to under-perform the Netflix. But the stock apears to be less risky and, when comparing its historical volatility, Telus Corp is 1.91 times less risky than Netflix. The stock trades about -0.03 of its potential returns per unit of risk. The Netflix is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 30,556 in Netflix on August 27, 2024 and sell it today you would earn a total of 59,223 from holding Netflix or generate 193.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telus Corp vs. Netflix
Performance |
| Timeline |
| Telus Corp |
| Netflix |
Telus Corp and Netflix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telus Corp and Netflix
The main advantage of trading using opposite Telus Corp and Netflix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telus Corp 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.| Telus Corp vs. Rogers Communications | Telus Corp vs. Vodafone Group PLC | Telus Corp vs. Orange SA ADR | Telus Corp vs. America Movil SAB |
| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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