Correlation Between Box and Nutanix
Can any of the company-specific risk be diversified away by investing in both Box and Nutanix 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 Box and Nutanix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Box Inc and Nutanix, you can compare the effects of market volatilities on Box and Nutanix 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 Box with a short position of Nutanix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Box and Nutanix.
Diversification Opportunities for Box and Nutanix
Poor diversification
The 3 months correlation between Box and Nutanix is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Box Inc and Nutanix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nutanix and Box 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 Box Inc are associated (or correlated) with Nutanix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nutanix has no effect on the direction of Box i.e., Box and Nutanix go up and down completely randomly.
Pair Corralation between Box and Nutanix
Considering the 90-day investment horizon Box is expected to generate 1.12 times less return on investment than Nutanix. But when comparing it to its historical volatility, Box Inc is 1.35 times less risky than Nutanix. It trades about 0.3 of its potential returns per unit of risk. Nutanix is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 6,497 in Nutanix on August 30, 2024 and sell it today you would earn a total of 738.00 from holding Nutanix or generate 11.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Box Inc vs. Nutanix
Performance |
| Timeline |
| Box Inc |
| Nutanix |
Box and Nutanix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Box and Nutanix
The main advantage of trading using opposite Box and Nutanix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Box position performs unexpectedly, Nutanix 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 Nutanix will offset losses from the drop in Nutanix's long position.The idea behind Box Inc and Nutanix 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.| Nutanix vs. Palo Alto Networks | Nutanix vs. Uipath Inc | Nutanix vs. Zscaler | Nutanix vs. Crowdstrike 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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