Correlation Between Crowdstrike Holdings and Nutanix

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

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

Diversification Opportunities for Crowdstrike Holdings and Nutanix

0.84

Correlation Coefficient

Crowdstrike Holdings  Nutanix

Very poor diversification

The 3 months correlation between Crowdstrike and Nutanix is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Crowdstrike Holdings and Nutanix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nutanix and Crowdstrike Holdings 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 Crowdstrike Holdings 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 Crowdstrike Holdings i.e., Crowdstrike Holdings and Nutanix go up and down completely randomly.

Pair Corralation between Crowdstrike Holdings and Nutanix

Given the investment horizon of 90 days Crowdstrike Holdings is expected to generate 1.06 times less return on investment than Nutanix. But when comparing it to its historical volatility, Crowdstrike Holdings is 1.13 times less risky than Nutanix. It trades about 0.18 of its potential returns per unit of risk. Nutanix is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  5,001  in Nutanix on August 27, 2024 and sell it today you would earn a total of  2,317  from holding Nutanix or generate 46.33% return on investment over 90 days.

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

Crowdstrike Holdings  vs.  Nutanix

Crowdstrike Holdings

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Crowdstrike Holdings are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Crowdstrike Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Nutanix

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nutanix are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Nutanix showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Crowdstrike Holdings and Nutanix

The main advantage of trading using opposite Crowdstrike Holdings and Nutanix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crowdstrike Holdings 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 Crowdstrike Holdings 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..