Correlation Between Stem and Nutanix
Can any of the company-specific risk be diversified away by investing in both Stem 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 Stem and Nutanix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stem Inc and Nutanix, you can compare the effects of market volatilities on Stem 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 Stem with a short position of Nutanix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stem and Nutanix.
Diversification Opportunities for Stem and Nutanix
Very good diversification
The 3 months correlation between Stem and Nutanix is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Stem Inc and Nutanix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nutanix and Stem 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 Stem 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 Stem i.e., Stem and Nutanix go up and down completely randomly.
Pair Corralation between Stem and Nutanix
Given the investment horizon of 90 days Stem Inc is expected to under-perform the Nutanix. In addition to that, Stem is 3.35 times more volatile than Nutanix. It trades about -0.02 of its total potential returns per unit of risk. Nutanix is currently generating about 0.04 per unit of volatility. If you would invest 5,752 in Nutanix on November 3, 2024 and sell it today you would earn a total of 1,125 from holding Nutanix or generate 19.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stem Inc vs. Nutanix
Performance |
| Timeline |
| Stem Inc |
| Nutanix |
Stem and Nutanix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stem and Nutanix
The main advantage of trading using opposite Stem and Nutanix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stem 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.| Stem vs. Palo Alto Networks | Stem vs. Crowdstrike Holdings | Stem vs. Cloudflare | Stem vs. Palantir Technologies Class |
| 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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