Correlation Between Equinix and Invitation Homes
Can any of the company-specific risk be diversified away by investing in both Equinix and Invitation Homes 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 Invitation Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equinix and Invitation Homes, you can compare the effects of market volatilities on Equinix and Invitation Homes 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 Invitation Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinix and Invitation Homes.
Diversification Opportunities for Equinix and Invitation Homes
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Equinix and Invitation is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Equinix and Invitation Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invitation Homes 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 Invitation Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invitation Homes has no effect on the direction of Equinix i.e., Equinix and Invitation Homes go up and down completely randomly.
Pair Corralation between Equinix and Invitation Homes
Given the investment horizon of 90 days Equinix is expected to generate 1.7 times more return on investment than Invitation Homes. However, Equinix is 1.7 times more volatile than Invitation Homes. It trades about 0.07 of its potential returns per unit of risk. Invitation Homes is currently generating about 0.02 per unit of risk. If you would invest 91,559 in Equinix on November 18, 2024 and sell it today you would earn a total of 1,801 from holding Equinix or generate 1.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equinix vs. Invitation Homes
Performance |
| Timeline |
| Equinix |
| Invitation Homes |
Equinix and Invitation Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equinix and Invitation Homes
The main advantage of trading using opposite Equinix and Invitation Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinix position performs unexpectedly, Invitation Homes 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 Invitation Homes will offset losses from the drop in Invitation Homes' long position.| Equinix vs. Crown Castle | Equinix vs. American Tower Corp | Equinix vs. Iron Mountain Incorporated | Equinix vs. Hannon Armstrong Sustainable |
| Invitation Homes vs. American Homes 4 | Invitation Homes vs. Mid America Apartment Communities | Invitation Homes vs. Camden Property Trust | Invitation Homes vs. Sun Communities |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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