Correlation Between Equinix and NSTAR Electric
Can any of the company-specific risk be diversified away by investing in both Equinix and NSTAR Electric 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 NSTAR Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equinix and NSTAR Electric, you can compare the effects of market volatilities on Equinix and NSTAR Electric 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 NSTAR Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinix and NSTAR Electric.
Diversification Opportunities for Equinix and NSTAR Electric
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Equinix and NSTAR is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Equinix and NSTAR Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NSTAR Electric 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 NSTAR Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NSTAR Electric has no effect on the direction of Equinix i.e., Equinix and NSTAR Electric go up and down completely randomly.
Pair Corralation between Equinix and NSTAR Electric
Given the investment horizon of 90 days Equinix is expected to generate 1.02 times more return on investment than NSTAR Electric. However, Equinix is 1.02 times more volatile than NSTAR Electric. It trades about 0.1 of its potential returns per unit of risk. NSTAR Electric is currently generating about 0.02 per unit of risk. If you would invest 73,285 in Equinix on October 12, 2024 and sell it today you would earn a total of 21,819 from holding Equinix or generate 29.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.4% |
| Values | Daily Returns |
Equinix vs. NSTAR Electric
Performance |
| Timeline |
| Equinix |
| NSTAR Electric |
Equinix and NSTAR Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equinix and NSTAR Electric
The main advantage of trading using opposite Equinix and NSTAR Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinix position performs unexpectedly, NSTAR Electric 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 NSTAR Electric will offset losses from the drop in NSTAR Electric's long position.| Equinix vs. Crown Castle | Equinix vs. American Tower Corp | Equinix vs. Iron Mountain Incorporated | Equinix vs. Hannon Armstrong Sustainable |
| NSTAR Electric vs. GameStop Corp | NSTAR Electric vs. Paysafe | NSTAR Electric vs. Asure Software | NSTAR Electric vs. Take Two Interactive Software |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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