Correlation Between Nutanix and Aecon
Can any of the company-specific risk be diversified away by investing in both Nutanix and Aecon 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 Nutanix and Aecon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nutanix and Aecon Group, you can compare the effects of market volatilities on Nutanix and Aecon 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 Nutanix with a short position of Aecon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nutanix and Aecon.
Diversification Opportunities for Nutanix and Aecon
Very poor diversification
The 3 months correlation between Nutanix and Aecon is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Nutanix and Aecon Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aecon Group and Nutanix 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 Nutanix are associated (or correlated) with Aecon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aecon Group has no effect on the direction of Nutanix i.e., Nutanix and Aecon go up and down completely randomly.
Pair Corralation between Nutanix and Aecon
Given the investment horizon of 90 days Nutanix is expected to generate 3.54 times less return on investment than Aecon. In addition to that, Nutanix is 1.23 times more volatile than Aecon Group. It trades about 0.04 of its total potential returns per unit of risk. Aecon Group is currently generating about 0.18 per unit of volatility. If you would invest 1,008 in Aecon Group on August 27, 2024 and sell it today you would earn a total of 1,065 from holding Aecon Group or generate 105.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 92.02% |
| Values | Daily Returns |
Nutanix vs. Aecon Group
Performance |
| Timeline |
| Nutanix |
| Aecon Group |
Nutanix and Aecon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nutanix and Aecon
The main advantage of trading using opposite Nutanix and Aecon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nutanix position performs unexpectedly, Aecon 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 Aecon will offset losses from the drop in Aecon's long position.| 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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