Correlation Between Worldline and Nutanix

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

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

Diversification Opportunities for Worldline and Nutanix

-0.38

Correlation Coefficient

Worldline  Nutanix

Very good diversification

The 3 months correlation between Worldline and Nutanix is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Worldline SA and Nutanix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nutanix and Worldline 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 Worldline SA 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 Worldline i.e., Worldline and Nutanix go up and down completely randomly.

Pair Corralation between Worldline and Nutanix

Assuming the 90 days horizon Worldline is expected to generate 2.86 times less return on investment than Nutanix. But when comparing it to its historical volatility, Worldline SA is 17.86 times less risky than Nutanix. It trades about 0.22 of its potential returns per unit of risk. Nutanix is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  6,457  in Nutanix on October 23, 2024 and sell it today you would earn a total of  57.00  from holding Nutanix or generate 0.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.0%
Values	Daily Returns

Worldline SA  vs.  Nutanix

Worldline SA

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Worldline SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Worldline reported solid returns over the last few months and may actually be approaching a breakup point.

Nutanix

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nutanix are ranked lower than 4 (%) 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 February 2025.

Pair Trading with Worldline and Nutanix

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

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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.