Correlation Between Equinix and Waters
Can any of the company-specific risk be diversified away by investing in both Equinix and Waters 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 Waters into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equinix and Waters, you can compare the effects of market volatilities on Equinix and Waters 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 Waters. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinix and Waters.
Diversification Opportunities for Equinix and Waters
Very weak diversification
The 3 months correlation between Equinix and Waters is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Equinix and Waters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waters 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 Waters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waters has no effect on the direction of Equinix i.e., Equinix and Waters go up and down completely randomly.
Pair Corralation between Equinix and Waters
Given the investment horizon of 90 days Equinix is expected to generate 0.39 times more return on investment than Waters. However, Equinix is 2.56 times less risky than Waters. It trades about 0.24 of its potential returns per unit of risk. Waters is currently generating about 0.08 per unit of risk. If you would invest 82,822 in Equinix on August 31, 2024 and sell it today you would earn a total of 15,088 from holding Equinix or generate 18.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equinix vs. Waters
Performance |
| Timeline |
| Equinix |
| Waters |
Equinix and Waters Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equinix and Waters
The main advantage of trading using opposite Equinix and Waters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinix position performs unexpectedly, Waters 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 Waters will offset losses from the drop in Waters' long position.| Equinix vs. Crown Castle | Equinix vs. American Tower Corp | Equinix vs. Iron Mountain Incorporated | Equinix vs. Hannon Armstrong Sustainable |
| Waters vs. IDEXX Laboratories | Waters vs. IQVIA Holdings | Waters vs. Charles River Laboratories | Waters vs. Revvity |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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