Correlation Between Equinix and Freedom Holding
Can any of the company-specific risk be diversified away by investing in both Equinix and Freedom Holding 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 Freedom Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equinix and Freedom Holding Corp, you can compare the effects of market volatilities on Equinix and Freedom Holding 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 Freedom Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinix and Freedom Holding.
Diversification Opportunities for Equinix and Freedom Holding
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Equinix and Freedom is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Equinix and Freedom Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Holding Corp 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 Freedom Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Holding Corp has no effect on the direction of Equinix i.e., Equinix and Freedom Holding go up and down completely randomly.
Pair Corralation between Equinix and Freedom Holding
Given the investment horizon of 90 days Equinix is expected to generate 2.18 times less return on investment than Freedom Holding. But when comparing it to its historical volatility, Equinix is 1.62 times less risky than Freedom Holding. It trades about 0.21 of its potential returns per unit of risk. Freedom Holding Corp is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 9,476 in Freedom Holding Corp on August 30, 2024 and sell it today you would earn a total of 2,367 from holding Freedom Holding Corp or generate 24.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equinix vs. Freedom Holding Corp
Performance |
| Timeline |
| Equinix |
| Freedom Holding Corp |
Equinix and Freedom Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equinix and Freedom Holding
The main advantage of trading using opposite Equinix and Freedom Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinix position performs unexpectedly, Freedom Holding 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 Freedom Holding will offset losses from the drop in Freedom Holding's long position.| Equinix vs. Crown Castle | Equinix vs. American Tower Corp | Equinix vs. Iron Mountain Incorporated | Equinix vs. Hannon Armstrong Sustainable |
| Freedom Holding vs. Nomura Holdings ADR | Freedom Holding vs. Scully Royalty | Freedom Holding vs. Oppenheimer Holdings | Freedom Holding vs. Houlihan Lokey |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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