Correlation Between Visa and Equinix
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and Equinix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and Equinix, you can compare the effects of market volatilities on Visa 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 Visa with a short position of Equinix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Equinix.
Diversification Opportunities for Visa and Equinix
Poor diversification
The 3 months correlation between Visa and Equinix is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Equinix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinix and Visa 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 Visa Class A 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 Visa i.e., Visa and Equinix go up and down completely randomly.
Pair Corralation between Visa and Equinix
Taking into account the 90-day investment horizon Visa is expected to generate 1.37 times less return on investment than Equinix. But when comparing it to its historical volatility, Visa Class A is 1.0 times less risky than Equinix. It trades about 0.1 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 Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Equinix
Performance |
| Timeline |
| Visa Class A |
| Equinix |
Visa and Equinix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Equinix
The main advantage of trading using opposite Visa and Equinix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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