Correlation Between Nutanix and Oracle

Can any of the company-specific risk be diversified away by investing in both Nutanix and Oracle 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 Oracle into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nutanix and Oracle, you can compare the effects of market volatilities on Nutanix and Oracle 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 Oracle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nutanix and Oracle.

Diversification Opportunities for Nutanix and Oracle

0.92

Correlation Coefficient

Nutanix  Oracle

Almost no diversification

The 3 months correlation between Nutanix and Oracle is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Nutanix and Oracle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oracle 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 Oracle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oracle has no effect on the direction of Nutanix i.e., Nutanix and Oracle go up and down completely randomly.

Pair Corralation between Nutanix and Oracle

Assuming the 90 days horizon Nutanix is expected to generate 1.16 times more return on investment than Oracle. However, Nutanix is 1.16 times more volatile than Oracle. It trades about -0.16 of its potential returns per unit of risk. Oracle is currently generating about -0.22 per unit of risk. If you would invest  6,866  in Nutanix on September 27, 2024 and sell it today you would lose (678.00) from holding Nutanix or give up 9.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Nutanix  vs.  Oracle

Nutanix

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nutanix are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Nutanix reported solid returns over the last few months and may actually be approaching a breakup point.

Oracle

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Oracle are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Oracle may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Nutanix and Oracle

The main advantage of trading using opposite Nutanix and Oracle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nutanix position performs unexpectedly, Oracle 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 Oracle will offset losses from the drop in Oracle's long position.

The idea behind Nutanix and Oracle 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.

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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.