Correlation Between Equinix and VeriSign
Can any of the company-specific risk be diversified away by investing in both Equinix and VeriSign 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 VeriSign into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equinix and VeriSign, you can compare the effects of market volatilities on Equinix and VeriSign 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 VeriSign. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinix and VeriSign.
Diversification Opportunities for Equinix and VeriSign
Weak diversification
The 3 months correlation between Equinix and VeriSign is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Equinix and VeriSign in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VeriSign 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 VeriSign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VeriSign has no effect on the direction of Equinix i.e., Equinix and VeriSign go up and down completely randomly.
Pair Corralation between Equinix and VeriSign
Given the investment horizon of 90 days Equinix is expected to generate 1.24 times more return on investment than VeriSign. However, Equinix is 1.24 times more volatile than VeriSign. It trades about 0.02 of its potential returns per unit of risk. VeriSign is currently generating about 0.01 per unit of risk. If you would invest 68,637 in Equinix on January 25, 2024 and sell it today you would earn a total of 7,553 from holding Equinix or generate 11.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equinix vs. VeriSign
Performance |
| Timeline |
| Equinix |
| VeriSign |
Equinix and VeriSign Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equinix and VeriSign
The main advantage of trading using opposite Equinix and VeriSign positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinix position performs unexpectedly, VeriSign 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 VeriSign will offset losses from the drop in VeriSign's long position.| Equinix vs. Crown Castle | Equinix vs. American Tower Corp | Equinix vs. Iron Mountain Incorporated | Equinix vs. Hannon Armstrong Sustainable |
| VeriSign vs. Akamai Technologies | VeriSign vs. Check Point Software | VeriSign vs. Qualys Inc | VeriSign vs. F5 Networks |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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