Correlation Between Endava and Nutanix

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

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

Diversification Opportunities for Endava and Nutanix

0.29

Correlation Coefficient

Endava  Nutanix

Modest diversification

The 3 months correlation between Endava and Nutanix is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Endava and Nutanix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nutanix and Endava 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 Endava 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 Endava i.e., Endava and Nutanix go up and down completely randomly.

Pair Corralation between Endava and Nutanix

Given the investment horizon of 90 days Endava is expected to under-perform the Nutanix. In addition to that, Endava is 1.28 times more volatile than Nutanix. It trades about -0.04 of its total potential returns per unit of risk. Nutanix is currently generating about 0.08 per unit of volatility. If you would invest  2,662  in Nutanix on October 6, 2024 and sell it today you would earn a total of  3,606  from holding Nutanix or generate 135.46% return on investment over 90 days.

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

Endava  vs.  Nutanix

Endava

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Endava are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Endava sustained solid returns over the last few months and may actually be approaching a breakup point.

Nutanix

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nutanix are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Nutanix is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Endava and Nutanix

The main advantage of trading using opposite Endava and Nutanix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Endava 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 Endava 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.

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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.