Correlation Between Equinix and Waste Management
Can any of the company-specific risk be diversified away by investing in both Equinix and Waste 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 Waste Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equinix and Waste Management, you can compare the effects of market volatilities on Equinix and Waste 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 Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinix and Waste Management.
Diversification Opportunities for Equinix and Waste Management
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Equinix and Waste is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Equinix and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of Equinix i.e., Equinix and Waste Management go up and down completely randomly.
Pair Corralation between Equinix and Waste Management
Given the investment horizon of 90 days Equinix is expected to generate 1.31 times less return on investment than Waste Management. But when comparing it to its historical volatility, Equinix is 1.05 times less risky than Waste Management. It trades about 0.24 of its potential returns per unit of risk. Waste Management is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 20,826 in Waste Management on August 29, 2024 and sell it today you would earn a total of 2,143 from holding Waste Management or generate 10.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equinix vs. Waste Management
Performance |
| Timeline |
| Equinix |
| Waste Management |
Equinix and Waste Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equinix and Waste Management
The main advantage of trading using opposite Equinix and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinix position performs unexpectedly, Waste 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 Waste Management will offset losses from the drop in Waste Management's long position.| Equinix vs. Crown Castle | Equinix vs. American Tower Corp | Equinix vs. Iron Mountain Incorporated | Equinix vs. Hannon Armstrong Sustainable |
| Waste Management vs. ABIVAX Socit Anonyme | Waste Management vs. Pinnacle Sherman Multi Strategy | Waste Management vs. Morningstar Unconstrained Allocation | Waste Management vs. SPACE |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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