Correlation Between Equinix and Terreno Realty
Can any of the company-specific risk be diversified away by investing in both Equinix and Terreno Realty 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 Terreno Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equinix and Terreno Realty, you can compare the effects of market volatilities on Equinix and Terreno Realty 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 Terreno Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinix and Terreno Realty.
Diversification Opportunities for Equinix and Terreno Realty
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Equinix and Terreno is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Equinix and Terreno Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terreno Realty 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 Terreno Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terreno Realty has no effect on the direction of Equinix i.e., Equinix and Terreno Realty go up and down completely randomly.
Pair Corralation between Equinix and Terreno Realty
Given the investment horizon of 90 days Equinix is expected to generate 1.15 times more return on investment than Terreno Realty. However, Equinix is 1.15 times more volatile than Terreno Realty. It trades about 0.27 of its potential returns per unit of risk. Terreno Realty is currently generating about 0.01 per unit of risk. If you would invest 90,164 in Equinix on August 30, 2024 and sell it today you would earn a total of 7,746 from holding Equinix or generate 8.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equinix vs. Terreno Realty
Performance |
| Timeline |
| Equinix |
| Terreno Realty |
Equinix and Terreno Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equinix and Terreno Realty
The main advantage of trading using opposite Equinix and Terreno Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinix position performs unexpectedly, Terreno Realty 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 Terreno Realty will offset losses from the drop in Terreno Realty's long position.| Equinix vs. Crown Castle | Equinix vs. American Tower Corp | Equinix vs. Iron Mountain Incorporated | Equinix vs. Hannon Armstrong Sustainable |
| Terreno Realty vs. Boston Properties | Terreno Realty vs. Douglas Emmett | Terreno Realty vs. Kilroy Realty Corp | Terreno Realty vs. Highwoods Properties |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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