Correlation Between NEXTDC and Pure Storage
Can any of the company-specific risk be diversified away by investing in both NEXTDC and Pure Storage 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 NEXTDC and Pure Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEXTDC LTD and Pure Storage, you can compare the effects of market volatilities on NEXTDC and Pure Storage 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 NEXTDC with a short position of Pure Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEXTDC and Pure Storage.
Diversification Opportunities for NEXTDC and Pure Storage
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NEXTDC and Pure is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding NEXTDC LTD and Pure Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pure Storage and NEXTDC 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 NEXTDC LTD are associated (or correlated) with Pure Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pure Storage has no effect on the direction of NEXTDC i.e., NEXTDC and Pure Storage go up and down completely randomly.
Pair Corralation between NEXTDC and Pure Storage
Assuming the 90 days horizon NEXTDC LTD is expected to under-perform the Pure Storage. But the stock apears to be less risky and, when comparing its historical volatility, NEXTDC LTD is 1.05 times less risky than Pure Storage. The stock trades about -0.04 of its potential returns per unit of risk. The Pure Storage is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 6,283 in Pure Storage on November 6, 2024 and sell it today you would earn a total of 283.00 from holding Pure Storage or generate 4.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NEXTDC LTD vs. Pure Storage
Performance |
| Timeline |
| NEXTDC LTD |
| Pure Storage |
NEXTDC and Pure Storage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEXTDC and Pure Storage
The main advantage of trading using opposite NEXTDC and Pure Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEXTDC position performs unexpectedly, Pure Storage 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 Pure Storage will offset losses from the drop in Pure Storage's long position.| NEXTDC vs. Delta Air Lines | NEXTDC vs. Norwegian Air Shuttle | NEXTDC vs. SINGAPORE AIRLINES | NEXTDC vs. Gol Intelligent Airlines |
| Pure Storage vs. Unity Software | Pure Storage vs. Direct Line Insurance | Pure Storage vs. SBI Insurance Group | Pure Storage vs. Guidewire Software |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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