Correlation Between Nutanix and FEC Resources

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

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

Diversification Opportunities for Nutanix and FEC Resources

-0.16

Correlation Coefficient

Nutanix  FEC Resources

Good diversification

The 3 months correlation between Nutanix and FEC is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Nutanix and FEC Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FEC Resources 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 FEC Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FEC Resources has no effect on the direction of Nutanix i.e., Nutanix and FEC Resources go up and down completely randomly.

Pair Corralation between Nutanix and FEC Resources

Given the investment horizon of 90 days Nutanix is expected to under-perform the FEC Resources. But the stock apears to be less risky and, when comparing its historical volatility, Nutanix is 5.5 times less risky than FEC Resources. The stock trades about -0.07 of its potential returns per unit of risk. The FEC Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  0.16  in FEC Resources on October 12, 2024 and sell it today you would earn a total of  0.00  from holding FEC Resources or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Nutanix  vs.  FEC Resources

Nutanix

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nutanix has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

FEC Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FEC Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Nutanix and FEC Resources

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

The idea behind Nutanix and FEC Resources 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.