Correlation Between Equinix and Vornado Realty
Can any of the company-specific risk be diversified away by investing in both Equinix and Vornado 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 Vornado Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equinix and Vornado Realty Trust, you can compare the effects of market volatilities on Equinix and Vornado 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 Vornado Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinix and Vornado Realty.
Diversification Opportunities for Equinix and Vornado Realty
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Equinix and Vornado is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Equinix and Vornado Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vornado Realty Trust 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 Vornado Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vornado Realty Trust has no effect on the direction of Equinix i.e., Equinix and Vornado Realty go up and down completely randomly.
Pair Corralation between Equinix and Vornado Realty
Given the investment horizon of 90 days Equinix is expected to generate 1.22 times more return on investment than Vornado Realty. However, Equinix is 1.22 times more volatile than Vornado Realty Trust. It trades about 0.13 of its potential returns per unit of risk. Vornado Realty Trust is currently generating about -0.02 per unit of risk. If you would invest 88,581 in Equinix on August 26, 2024 and sell it today you would earn a total of 5,056 from holding Equinix or generate 5.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equinix vs. Vornado Realty Trust
Performance |
| Timeline |
| Equinix |
| Vornado Realty Trust |
Equinix and Vornado Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equinix and Vornado Realty
The main advantage of trading using opposite Equinix and Vornado Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinix position performs unexpectedly, Vornado 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 Vornado Realty will offset losses from the drop in Vornado Realty's long position.| Equinix vs. Crown Castle | Equinix vs. American Tower Corp | Equinix vs. Iron Mountain Incorporated | Equinix vs. Hannon Armstrong Sustainable |
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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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