Correlation Between NetScout Systems and Nutanix

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

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

Diversification Opportunities for NetScout Systems and Nutanix

0.65

Correlation Coefficient

NetScout Systems  Nutanix

Poor diversification

The 3 months correlation between NetScout and Nutanix is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding NetScout Systems and Nutanix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nutanix and NetScout Systems 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 NetScout Systems 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 NetScout Systems i.e., NetScout Systems and Nutanix go up and down completely randomly.

Pair Corralation between NetScout Systems and Nutanix

Given the investment horizon of 90 days NetScout Systems is expected to generate 0.61 times more return on investment than Nutanix. However, NetScout Systems is 1.64 times less risky than Nutanix. It trades about 0.0 of its potential returns per unit of risk. Nutanix is currently generating about -0.12 per unit of risk. If you would invest  2,156  in NetScout Systems on September 22, 2024 and sell it today you would lose (7.00) from holding NetScout Systems or give up 0.32% of portfolio value over 90 days.

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

NetScout Systems  vs.  Nutanix

NetScout Systems

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NetScout Systems are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, NetScout Systems is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Nutanix

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nutanix are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Nutanix may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with NetScout Systems and Nutanix

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

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.