Correlation Between Mesabi Trust and Nutanix

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

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

Diversification Opportunities for Mesabi Trust and Nutanix

0.62

Correlation Coefficient

Mesabi Trust  Nutanix

Poor diversification

The 3 months correlation between Mesabi and Nutanix is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Mesabi Trust and Nutanix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nutanix and Mesabi Trust 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 Mesabi Trust 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 Mesabi Trust i.e., Mesabi Trust and Nutanix go up and down completely randomly.

Pair Corralation between Mesabi Trust and Nutanix

Considering the 90-day investment horizon Mesabi Trust is expected to generate 1.59 times less return on investment than Nutanix. In addition to that, Mesabi Trust is 1.02 times more volatile than Nutanix. It trades about 0.05 of its total potential returns per unit of risk. Nutanix is currently generating about 0.08 per unit of volatility. If you would invest  2,630  in Nutanix on September 24, 2024 and sell it today you would earn a total of  3,877  from holding Nutanix or generate 147.41% return on investment over 90 days.

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

Mesabi Trust  vs.  Nutanix

Mesabi Trust

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mesabi Trust are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Mesabi Trust sustained 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 January 2025.

Pair Trading with Mesabi Trust and Nutanix

The main advantage of trading using opposite Mesabi Trust and Nutanix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesabi Trust 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 Mesabi Trust 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.