Correlation Between Equinix and Essential Properties
Can any of the company-specific risk be diversified away by investing in both Equinix and Essential Properties 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 Essential Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equinix and Essential Properties Realty, you can compare the effects of market volatilities on Equinix and Essential Properties 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 Essential Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinix and Essential Properties.
Diversification Opportunities for Equinix and Essential Properties
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Equinix and Essential is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Equinix and Essential Properties Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Essential Properties 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 Essential Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Essential Properties has no effect on the direction of Equinix i.e., Equinix and Essential Properties go up and down completely randomly.
Pair Corralation between Equinix and Essential Properties
Given the investment horizon of 90 days Equinix is expected to under-perform the Essential Properties. But the stock apears to be less risky and, when comparing its historical volatility, Equinix is 1.23 times less risky than Essential Properties. The stock trades about -0.35 of its potential returns per unit of risk. The Essential Properties Realty is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 2,524 in Essential Properties Realty on January 20, 2024 and sell it today you would lose (8.00) from holding Essential Properties Realty or give up 0.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equinix vs. Essential Properties Realty
Performance |
| Timeline |
| Equinix |
| Essential Properties |
Equinix and Essential Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equinix and Essential Properties
The main advantage of trading using opposite Equinix and Essential Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinix position performs unexpectedly, Essential Properties 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 Essential Properties will offset losses from the drop in Essential Properties' long position.| Equinix vs. Crown Castle | Equinix vs. American Tower Corp | Equinix vs. Iron Mountain Incorporated | Equinix vs. Hannon Armstrong Sustainable |
| Essential Properties vs. Armada Hflr Pr | Essential Properties vs. CTO Realty Growth | Essential Properties vs. Brightspire Capital | Essential Properties vs. Broadstone Net LeaseInc |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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