Correlation Between Equinix and VNET Group
Can any of the company-specific risk be diversified away by investing in both Equinix and VNET Group 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 Equinix and VNET Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equinix and VNET Group DRC, you can compare the effects of market volatilities on Equinix and VNET Group 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 Equinix with a short position of VNET Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinix and VNET Group.
Diversification Opportunities for Equinix and VNET Group
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Equinix and VNET is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Equinix and VNET Group DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VNET Group DRC and Equinix 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 Equinix are associated (or correlated) with VNET Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VNET Group DRC has no effect on the direction of Equinix i.e., Equinix and VNET Group go up and down completely randomly.
Pair Corralation between Equinix and VNET Group
Given the investment horizon of 90 days Equinix is expected to generate 0.3 times more return on investment than VNET Group. However, Equinix is 3.34 times less risky than VNET Group. It trades about -0.14 of its potential returns per unit of risk. VNET Group DRC is currently generating about -0.16 per unit of risk. If you would invest 79,252 in Equinix on January 25, 2024 and sell it today you would lose (3,718) from holding Equinix or give up 4.69% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Equinix vs. VNET Group DRC
Performance |
Timeline |
Equinix |
VNET Group DRC |
Equinix and VNET Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Equinix and VNET Group
The main advantage of trading using opposite Equinix and VNET Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinix position performs unexpectedly, VNET Group 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 VNET Group will offset losses from the drop in VNET Group's long position.Equinix vs. Crown Castle | Equinix vs. American Tower Corp | Equinix vs. Iron Mountain Incorporated | Equinix vs. Hannon Armstrong Sustainable |
VNET Group vs. CACI International | VNET Group vs. CDW Corp | VNET Group vs. Jack Henry Associates | VNET Group vs. Broadridge Financial Solutions |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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