Correlation Between Equinix and CoreCivic

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

By analyzing existing cross correlation between Equinix and CoreCivic, you can compare the effects of market volatilities on Equinix and CoreCivic 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 CoreCivic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinix and CoreCivic.

Diversification Opportunities for Equinix and CoreCivic

-0.3

Correlation Coefficient

Equinix  CoreCivic

Very good diversification

The 3 months correlation between Equinix and CoreCivic is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Equinix and CoreCivic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CoreCivic 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 CoreCivic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CoreCivic has no effect on the direction of Equinix i.e., Equinix and CoreCivic go up and down completely randomly.

Pair Corralation between Equinix and CoreCivic

Given the investment horizon of 90 days Equinix is expected to under-perform the CoreCivic. In addition to that, Equinix is 1.02 times more volatile than CoreCivic. It trades about -0.35 of its total potential returns per unit of risk. CoreCivic is currently generating about -0.21 per unit of volatility. If you would invest  1,568  in CoreCivic on January 20, 2024 and sell it today you would lose (98.00) from holding CoreCivic or give up 6.25% of portfolio value over 90 days.

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

Equinix  vs.  CoreCivic

Equinix

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Equinix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

CoreCivic

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CoreCivic are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, CoreCivic is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Equinix and CoreCivic

The main advantage of trading using opposite Equinix and CoreCivic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinix position performs unexpectedly, CoreCivic 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 CoreCivic will offset losses from the drop in CoreCivic's long position.

The idea behind Equinix and CoreCivic 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.

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.