Correlation Between Equinix and Royalty Management
Can any of the company-specific risk be diversified away by investing in both Equinix and Royalty Management 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 Royalty Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equinix and Royalty Management Holding, you can compare the effects of market volatilities on Equinix and Royalty Management 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 Royalty Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinix and Royalty Management.
Diversification Opportunities for Equinix and Royalty Management
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Equinix and Royalty is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Equinix and Royalty Management Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royalty Management 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 Royalty Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royalty Management has no effect on the direction of Equinix i.e., Equinix and Royalty Management go up and down completely randomly.
Pair Corralation between Equinix and Royalty Management
Given the investment horizon of 90 days Equinix is expected to generate 0.25 times more return on investment than Royalty Management. However, Equinix is 4.07 times less risky than Royalty Management. It trades about 0.05 of its potential returns per unit of risk. Royalty Management Holding is currently generating about -0.04 per unit of risk. If you would invest 65,581 in Equinix on November 30, 2024 and sell it today you would earn a total of 24,881 from holding Equinix or generate 37.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equinix vs. Royalty Management Holding
Performance |
| Timeline |
| Equinix |
| Royalty Management |
Equinix and Royalty Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equinix and Royalty Management
The main advantage of trading using opposite Equinix and Royalty Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinix position performs unexpectedly, Royalty Management 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 Royalty Management will offset losses from the drop in Royalty Management's long position.| Equinix vs. Crown Castle | Equinix vs. American Tower Corp | Equinix vs. Iron Mountain Incorporated | Equinix vs. Hannon Armstrong Sustainable |
| Royalty Management vs. Anheuser Busch Inbev | Royalty Management vs. Cementos Pacasmayo SAA | Royalty Management vs. RLX Technology | Royalty Management vs. Philip Morris International |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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