Correlation Between Realty Income and Equinix
Can any of the company-specific risk be diversified away by investing in both Realty Income and Equinix 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 Realty Income and Equinix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Realty Income and Equinix, you can compare the effects of market volatilities on Realty Income and Equinix 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 Realty Income with a short position of Equinix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Realty Income and Equinix.
Diversification Opportunities for Realty Income and Equinix
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Realty and Equinix is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Realty Income and Equinix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinix and Realty Income 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 Realty Income are associated (or correlated) with Equinix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equinix has no effect on the direction of Realty Income i.e., Realty Income and Equinix go up and down completely randomly.
Pair Corralation between Realty Income and Equinix
Taking into account the 90-day investment horizon Realty Income is expected to generate 1.44 times less return on investment than Equinix. But when comparing it to its historical volatility, Realty Income is 1.19 times less risky than Equinix. It trades about 0.11 of its potential returns per unit of risk. Equinix is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 76,116 in Equinix on August 24, 2024 and sell it today you would earn a total of 16,244 from holding Equinix or generate 21.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Realty Income vs. Equinix
Performance |
| Timeline |
| Realty Income |
| Equinix |
Realty Income and Equinix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Realty Income and Equinix
The main advantage of trading using opposite Realty Income and Equinix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Realty Income position performs unexpectedly, Equinix 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 Equinix will offset losses from the drop in Equinix's long position.| Realty Income vs. Federal Realty Investment | Realty Income vs. Macerich Company | Realty Income vs. National Retail Properties | Realty Income vs. Kimco Realty |
| Equinix vs. Crown Castle | Equinix vs. American Tower Corp | Equinix vs. Hannon Armstrong Sustainable | Equinix vs. Digital Realty Trust |
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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