Correlation Between Chemours and Equinix

Can any of the company-specific risk be diversified away by investing in both Chemours 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 Chemours and Equinix into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chemours Co and Equinix, you can compare the effects of market volatilities on Chemours 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 Chemours with a short position of Equinix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chemours and Equinix.

Diversification Opportunities for Chemours and Equinix

0.58

Correlation Coefficient

Chemours  Equinix

Very weak diversification

The 3 months correlation between Chemours and Equinix is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Chemours Co and Equinix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinix and Chemours 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 Chemours Co 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 Chemours i.e., Chemours and Equinix go up and down completely randomly.

Pair Corralation between Chemours and Equinix

Allowing for the 90-day total investment horizon Chemours Co is expected to under-perform the Equinix. In addition to that, Chemours is 2.47 times more volatile than Equinix. It trades about -0.05 of its total potential returns per unit of risk. Equinix is currently generating about 0.22 per unit of volatility. If you would invest  90,948  in Equinix on September 19, 2024 and sell it today you would earn a total of  5,136  from holding Equinix or generate 5.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Chemours Co  vs.  Equinix

Chemours

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chemours Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Chemours is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Equinix

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Equinix are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent forward indicators, Equinix may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Chemours and Equinix

The main advantage of trading using opposite Chemours and Equinix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chemours 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.

The idea behind Chemours Co and Equinix pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.