Correlation Between Waste Management and Equinix
Can any of the company-specific risk be diversified away by investing in both Waste Management 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 Waste Management and Equinix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waste Management and Equinix, you can compare the effects of market volatilities on Waste Management 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 Waste Management with a short position of Equinix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waste Management and Equinix.
Diversification Opportunities for Waste Management and Equinix
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Waste and Equinix is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management and Equinix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinix and Waste Management 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 Waste Management 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 Waste Management i.e., Waste Management and Equinix go up and down completely randomly.
Pair Corralation between Waste Management and Equinix
Allowing for the 90-day total investment horizon Waste Management is expected to generate 0.69 times more return on investment than Equinix. However, Waste Management is 1.44 times less risky than Equinix. It trades about 0.09 of its potential returns per unit of risk. Equinix is currently generating about 0.05 per unit of risk. If you would invest 14,800 in Waste Management on September 1, 2024 and sell it today you would earn a total of 8,022 from holding Waste Management or generate 54.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Waste Management vs. Equinix
Performance |
| Timeline |
| Waste Management |
| Equinix |
Waste Management and Equinix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waste Management and Equinix
The main advantage of trading using opposite Waste Management and Equinix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Management 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.| Waste Management vs. CRA International | Waste Management vs. ICF International | Waste Management vs. Forrester Research | Waste Management vs. Huron Consulting Group |
| 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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