Correlation Between Via Renewables and Nutanix

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

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

Diversification Opportunities for Via Renewables and Nutanix

0.44

Correlation Coefficient

Via Renewables  Nutanix

Very weak diversification

The 3 months correlation between Via and Nutanix is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Via Renewables and Nutanix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nutanix and Via Renewables 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 Via Renewables 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 Via Renewables i.e., Via Renewables and Nutanix go up and down completely randomly.

Pair Corralation between Via Renewables and Nutanix

Assuming the 90 days horizon Via Renewables is expected to generate 0.3 times more return on investment than Nutanix. However, Via Renewables is 3.36 times less risky than Nutanix. It trades about 0.45 of its potential returns per unit of risk. Nutanix is currently generating about -0.08 per unit of risk. If you would invest  2,211  in Via Renewables on September 29, 2024 and sell it today you would earn a total of  147.00  from holding Via Renewables or generate 6.65% return on investment over 90 days.

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

Via Renewables  vs.  Nutanix

Via Renewables

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Via Renewables are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Via Renewables reported solid returns over the last few months and may actually be approaching a breakup point.

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 uncertain basic indicators, Nutanix may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Via Renewables and Nutanix

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

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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.