Correlation Between Uber Technologies and Equinix
Can any of the company-specific risk be diversified away by investing in both Uber Technologies 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 Uber Technologies and Equinix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Uber Technologies and Equinix, you can compare the effects of market volatilities on Uber Technologies 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 Uber Technologies with a short position of Equinix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uber Technologies and Equinix.
Diversification Opportunities for Uber Technologies and Equinix
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Uber and Equinix is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Uber Technologies and Equinix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinix and Uber Technologies 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 Uber Technologies 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 Uber Technologies i.e., Uber Technologies and Equinix go up and down completely randomly.
Pair Corralation between Uber Technologies and Equinix
Assuming the 90 days trading horizon Uber Technologies is expected to generate 2.6 times less return on investment than Equinix. But when comparing it to its historical volatility, Uber Technologies is 1.42 times less risky than Equinix. It trades about 0.11 of its potential returns per unit of risk. Equinix is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 6,602 in Equinix on September 1, 2024 and sell it today you would earn a total of 781.00 from holding Equinix or generate 11.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Uber Technologies vs. Equinix
Performance |
| Timeline |
| Uber Technologies |
| Equinix |
Uber Technologies and Equinix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Uber Technologies and Equinix
The main advantage of trading using opposite Uber Technologies and Equinix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uber Technologies 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.| Uber Technologies vs. Warner Music Group | Uber Technologies vs. The Trade Desk | Uber Technologies vs. United Airlines Holdings | Uber Technologies vs. Tyson Foods |
| Equinix vs. Unity Software | Equinix vs. Cognizant Technology Solutions | Equinix vs. Uber Technologies | Equinix vs. BIONTECH SE DRN |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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