Correlation Between Simon Property and Equinix
Can any of the company-specific risk be diversified away by investing in both Simon Property 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 Simon Property and Equinix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simon Property Group and Equinix, you can compare the effects of market volatilities on Simon Property 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 Simon Property with a short position of Equinix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simon Property and Equinix.
Diversification Opportunities for Simon Property and Equinix
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Simon and Equinix is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Simon Property Group and Equinix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinix and Simon Property 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 Simon Property Group 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 Simon Property i.e., Simon Property and Equinix go up and down completely randomly.
Pair Corralation between Simon Property and Equinix
Considering the 90-day investment horizon Simon Property is expected to generate 1.35 times less return on investment than Equinix. But when comparing it to its historical volatility, Simon Property Group is 1.19 times less risky than Equinix. It trades about 0.21 of its potential returns per unit of risk. Equinix is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 82,822 in Equinix on September 3, 2024 and sell it today you would earn a total of 15,326 from holding Equinix or generate 18.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simon Property Group vs. Equinix
Performance |
| Timeline |
| Simon Property Group |
| Equinix |
Simon Property and Equinix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simon Property and Equinix
The main advantage of trading using opposite Simon Property and Equinix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simon Property 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.| Simon Property vs. Federal Realty Investment | Simon Property vs. Agree Realty | Simon Property vs. National Retail Properties | Simon Property vs. Kimco Realty |
| Equinix vs. Crown Castle | Equinix vs. American Tower Corp | Equinix vs. Iron Mountain Incorporated | Equinix vs. Hannon Armstrong Sustainable |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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