Correlation Between Power REIT and Equinix
Can any of the company-specific risk be diversified away by investing in both Power REIT and Equinix 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 Power REIT and Equinix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power REIT and Equinix, you can compare the effects of market volatilities on Power REIT and Equinix 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 Power REIT with a short position of Equinix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power REIT and Equinix.
Diversification Opportunities for Power REIT and Equinix
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Power and Equinix is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Power REIT and Equinix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinix and Power REIT 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 Power REIT are associated (or correlated) with Equinix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equinix has no effect on the direction of Power REIT i.e., Power REIT and Equinix go up and down completely randomly.
Pair Corralation between Power REIT and Equinix
Allowing for the 90-day total investment horizon Power REIT is expected to under-perform the Equinix. In addition to that, Power REIT is 4.19 times more volatile than Equinix. It trades about -0.01 of its total potential returns per unit of risk. Equinix is currently generating about 0.05 per unit of volatility. If you would invest 71,202 in Equinix on January 24, 2024 and sell it today you would earn a total of 4,988 from holding Equinix or generate 7.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.4% |
| Values | Daily Returns |
Power REIT vs. Equinix
Performance |
| Timeline |
| Power REIT |
| Equinix |
Power REIT and Equinix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power REIT and Equinix
The main advantage of trading using opposite Power REIT and Equinix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power REIT position performs unexpectedly, Equinix 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 Equinix will offset losses from the drop in Equinix's long position.| Power REIT vs. Newlake Capital Partners | Power REIT vs. Outfront Media | Power REIT vs. Uniti Group | Power REIT vs. Farmland Partners |
| Equinix vs. Crown Castle | Equinix vs. American Tower Corp | Equinix vs. Iron Mountain Incorporated | Equinix vs. Hannon Armstrong Sustainable |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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