Correlation Between Equinix and Apple Hospitality
Can any of the company-specific risk be diversified away by investing in both Equinix and Apple Hospitality 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 Apple Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equinix and Apple Hospitality REIT, you can compare the effects of market volatilities on Equinix and Apple Hospitality 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 Apple Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinix and Apple Hospitality.
Diversification Opportunities for Equinix and Apple Hospitality
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Equinix and Apple is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Equinix and Apple Hospitality REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Hospitality REIT 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 Apple Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Hospitality REIT has no effect on the direction of Equinix i.e., Equinix and Apple Hospitality go up and down completely randomly.
Pair Corralation between Equinix and Apple Hospitality
Given the investment horizon of 90 days Equinix is expected to generate 1.15 times more return on investment than Apple Hospitality. However, Equinix is 1.15 times more volatile than Apple Hospitality REIT. It trades about 0.05 of its potential returns per unit of risk. Apple Hospitality REIT is currently generating about 0.01 per unit of risk. If you would invest 78,105 in Equinix on August 24, 2024 and sell it today you would earn a total of 14,255 from holding Equinix or generate 18.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equinix vs. Apple Hospitality REIT
Performance |
| Timeline |
| Equinix |
| Apple Hospitality REIT |
Equinix and Apple Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equinix and Apple Hospitality
The main advantage of trading using opposite Equinix and Apple Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinix position performs unexpectedly, Apple Hospitality 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 Apple Hospitality will offset losses from the drop in Apple Hospitality's long position.| Equinix vs. Crown Castle | Equinix vs. American Tower Corp | Equinix vs. Hannon Armstrong Sustainable | Equinix vs. Digital Realty Trust |
| Apple Hospitality vs. Park Hotels Resorts | Apple Hospitality vs. Diamondrock Hospitality | Apple Hospitality vs. Ryman Hospitality Properties | Apple Hospitality vs. Pebblebrook Hotel Trust |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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