Correlation Between Nutanix and Bakkt Holdings

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

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

Diversification Opportunities for Nutanix and Bakkt Holdings

-0.54

Correlation Coefficient

Nutanix  Bakkt Holdings

Excellent diversification

The 3 months correlation between Nutanix and Bakkt is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Nutanix and Bakkt Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bakkt Holdings 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 Bakkt Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bakkt Holdings has no effect on the direction of Nutanix i.e., Nutanix and Bakkt Holdings go up and down completely randomly.

Pair Corralation between Nutanix and Bakkt Holdings

Given the investment horizon of 90 days Nutanix is expected to generate 0.4 times more return on investment than Bakkt Holdings. However, Nutanix is 2.49 times less risky than Bakkt Holdings. It trades about 0.11 of its potential returns per unit of risk. Bakkt Holdings is currently generating about -0.18 per unit of risk. If you would invest  6,528  in Nutanix on November 29, 2024 and sell it today you would earn a total of  1,128  from holding Nutanix or generate 17.28% return on investment over 90 days.

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

Nutanix  vs.  Bakkt Holdings

Nutanix

Risk-Adjusted Performance

Insignificant

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. In spite of fairly abnormal basic indicators, Nutanix showed solid returns over the last few months and may actually be approaching a breakup point.

Bakkt Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bakkt Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward-looking signals remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Nutanix and Bakkt Holdings

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

The idea behind Nutanix and Bakkt Holdings 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.