Correlation Between Equinix and Life Time
Can any of the company-specific risk be diversified away by investing in both Equinix and Life Time 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 Life Time into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equinix and Life Time Group, you can compare the effects of market volatilities on Equinix and Life Time 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 Life Time. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinix and Life Time.
Diversification Opportunities for Equinix and Life Time
Significant diversification
The 3 months correlation between Equinix and Life is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Equinix and Life Time Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Time Group 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 Life Time. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Time Group has no effect on the direction of Equinix i.e., Equinix and Life Time go up and down completely randomly.
Pair Corralation between Equinix and Life Time
Given the investment horizon of 90 days Equinix is expected to generate 1.28 times less return on investment than Life Time. But when comparing it to its historical volatility, Equinix is 1.67 times less risky than Life Time. It trades about 0.18 of its potential returns per unit of risk. Life Time Group is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,727 in Life Time Group on September 1, 2024 and sell it today you would earn a total of 700.00 from holding Life Time Group or generate 40.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equinix vs. Life Time Group
Performance |
| Timeline |
| Equinix |
| Life Time Group |
Equinix and Life Time Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equinix and Life Time
The main advantage of trading using opposite Equinix and Life Time positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinix position performs unexpectedly, Life Time 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 Life Time will offset losses from the drop in Life Time's long position.| Equinix vs. Crown Castle | Equinix vs. American Tower Corp | Equinix vs. Iron Mountain Incorporated | Equinix vs. Hannon Armstrong Sustainable |
| Life Time vs. The Wendys Co | Life Time vs. Shake Shack | Life Time vs. Papa Johns International | Life Time vs. Darden Restaurants |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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