Correlation Between CA Modas and Equinix
Can any of the company-specific risk be diversified away by investing in both CA Modas 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 CA Modas and Equinix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CA Modas SA and Equinix, you can compare the effects of market volatilities on CA Modas 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 CA Modas with a short position of Equinix. Check out your portfolio center. Please also check ongoing floating volatility patterns of CA Modas and Equinix.
Diversification Opportunities for CA Modas and Equinix
Poor diversification
The 3 months correlation between CEAB3 and Equinix is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding CA Modas SA and Equinix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinix and CA Modas 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 CA Modas SA 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 CA Modas i.e., CA Modas and Equinix go up and down completely randomly.
Pair Corralation between CA Modas and Equinix
Assuming the 90 days trading horizon CA Modas SA is expected to under-perform the Equinix. In addition to that, CA Modas is 1.86 times more volatile than Equinix. It trades about -0.15 of its total potential returns per unit of risk. Equinix is currently generating about 0.23 per unit of volatility. If you would invest 6,530 in Equinix on September 2, 2024 and sell it today you would earn a total of 853.00 from holding Equinix or generate 13.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CA Modas SA vs. Equinix
Performance |
| Timeline |
| CA Modas SA |
| Equinix |
CA Modas and Equinix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CA Modas and Equinix
The main advantage of trading using opposite CA Modas and Equinix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CA Modas 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.| CA Modas vs. Marisa Lojas SA | CA Modas vs. Vivara Participaes SA | CA Modas vs. Guararapes Confeces SA | CA Modas vs. Atacado SA |
| Equinix vs. Deutsche Bank Aktiengesellschaft | Equinix vs. Verizon Communications | Equinix vs. Monster Beverage | Equinix vs. Ameriprise Financial |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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