Correlation Between Equinix and ARCA Gold
Can any of the company-specific risk be diversified away by investing in both Equinix and ARCA Gold 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 ARCA Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equinix and ARCA Gold BUGS, you can compare the effects of market volatilities on Equinix and ARCA Gold 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 ARCA Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinix and ARCA Gold.
Diversification Opportunities for Equinix and ARCA Gold
Good diversification
The 3 months correlation between Equinix and ARCA is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Equinix and ARCA Gold BUGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARCA Gold BUGS 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 ARCA Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARCA Gold BUGS has no effect on the direction of Equinix i.e., Equinix and ARCA Gold go up and down completely randomly.
Pair Corralation between Equinix and ARCA Gold
Given the investment horizon of 90 days Equinix is expected to generate 0.59 times more return on investment than ARCA Gold. However, Equinix is 1.7 times less risky than ARCA Gold. It trades about 0.28 of its potential returns per unit of risk. ARCA Gold BUGS is currently generating about -0.07 per unit of risk. If you would invest 89,169 in Equinix on September 5, 2024 and sell it today you would earn a total of 7,395 from holding Equinix or generate 8.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equinix vs. ARCA Gold BUGS
Performance |
| Timeline |
Equinix and ARCA Gold Volatility Contrast
Predicted Return Density |
| Returns |
Equinix
Pair trading matchups for Equinix
ARCA Gold BUGS
Pair trading matchups for ARCA Gold
Pair Trading with Equinix and ARCA Gold
The main advantage of trading using opposite Equinix and ARCA Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinix position performs unexpectedly, ARCA Gold 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 ARCA Gold will offset losses from the drop in ARCA Gold's long position.| Equinix vs. Crown Castle | Equinix vs. American Tower Corp | Equinix vs. Iron Mountain Incorporated | Equinix vs. Hannon Armstrong Sustainable |
| ARCA Gold vs. Hannon Armstrong Sustainable | ARCA Gold vs. Equinix | ARCA Gold vs. Stepstone Group | ARCA Gold vs. Nasdaq Inc |
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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