Correlation Between Nutanix and Zscaler

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

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

Diversification Opportunities for Nutanix and Zscaler

0.84

Correlation Coefficient

Nutanix  Zscaler

Very poor diversification

The 3 months correlation between Nutanix and Zscaler is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Nutanix and Zscaler in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zscaler 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 Zscaler. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zscaler has no effect on the direction of Nutanix i.e., Nutanix and Zscaler go up and down completely randomly.

Pair Corralation between Nutanix and Zscaler

Given the investment horizon of 90 days Nutanix is expected to generate 0.96 times more return on investment than Zscaler. However, Nutanix is 1.04 times less risky than Zscaler. It trades about 0.01 of its potential returns per unit of risk. Zscaler is currently generating about -0.03 per unit of risk. If you would invest  6,670  in Nutanix on November 27, 2024 and sell it today you would earn a total of  23.00  from holding Nutanix or generate 0.34% return on investment over 90 days.

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

Nutanix  vs.  Zscaler

Nutanix

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nutanix are ranked lower than 1 (%) 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.

Zscaler

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zscaler has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Zscaler is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Nutanix and Zscaler

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

The idea behind Nutanix and Zscaler 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.