Correlation Between Equinix and Farmland Partners
Can any of the company-specific risk be diversified away by investing in both Equinix and Farmland Partners 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 Farmland Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equinix and Farmland Partners, you can compare the effects of market volatilities on Equinix and Farmland Partners 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 Farmland Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinix and Farmland Partners.
Diversification Opportunities for Equinix and Farmland Partners
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Equinix and Farmland is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Equinix and Farmland Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmland Partners 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 Farmland Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmland Partners has no effect on the direction of Equinix i.e., Equinix and Farmland Partners go up and down completely randomly.
Pair Corralation between Equinix and Farmland Partners
Given the investment horizon of 90 days Equinix is expected to generate 0.89 times more return on investment than Farmland Partners. However, Equinix is 1.12 times less risky than Farmland Partners. It trades about 0.05 of its potential returns per unit of risk. Farmland Partners is currently generating about 0.01 per unit of risk. If you would invest 66,004 in Equinix on August 27, 2024 and sell it today you would earn a total of 27,633 from holding Equinix or generate 41.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equinix vs. Farmland Partners
Performance |
| Timeline |
| Equinix |
| Farmland Partners |
Equinix and Farmland Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equinix and Farmland Partners
The main advantage of trading using opposite Equinix and Farmland Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinix position performs unexpectedly, Farmland Partners 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 Farmland Partners will offset losses from the drop in Farmland Partners' long position.| Equinix vs. Crown Castle | Equinix vs. American Tower Corp | Equinix vs. Iron Mountain Incorporated | Equinix vs. Hannon Armstrong Sustainable |
| Farmland Partners vs. Broadstone Net Lease | Farmland Partners vs. Armada Hflr Pr | Farmland Partners vs. Brightspire Capital | Farmland Partners vs. Safehold |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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