Correlation Between Nutanix and Secureworks Corp

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

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

Diversification Opportunities for Nutanix and Secureworks Corp

0.58

Correlation Coefficient

Nutanix  Secureworks Corp

Very weak diversification

The 3 months correlation between Nutanix and Secureworks is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Nutanix and Secureworks Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Secureworks Corp 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 Secureworks Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Secureworks Corp has no effect on the direction of Nutanix i.e., Nutanix and Secureworks Corp go up and down completely randomly.

Pair Corralation between Nutanix and Secureworks Corp

Given the investment horizon of 90 days Nutanix is expected to generate 0.67 times more return on investment than Secureworks Corp. However, Nutanix is 1.48 times less risky than Secureworks Corp. It trades about 0.05 of its potential returns per unit of risk. Secureworks Corp is currently generating about 0.02 per unit of risk. If you would invest  6,319  in Nutanix on August 30, 2024 and sell it today you would earn a total of  351.00  from holding Nutanix or generate 5.55% return on investment over 90 days.

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

Nutanix  vs.  Secureworks Corp

Nutanix

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nutanix are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Nutanix may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Secureworks Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Secureworks Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Secureworks Corp is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nutanix and Secureworks Corp

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

The idea behind Nutanix and Secureworks Corp 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.