Correlation Between Edgewell Personal and Equinix

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

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

Diversification Opportunities for Edgewell Personal and Equinix

0.47

Correlation Coefficient

Edgewell Personal  Equinix

Very weak diversification

The 3 months correlation between Edgewell and Equinix is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Edgewell Personal Care and Equinix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinix and Edgewell Personal 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 Edgewell Personal Care 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 Edgewell Personal i.e., Edgewell Personal and Equinix go up and down completely randomly.

Pair Corralation between Edgewell Personal and Equinix

Considering the 90-day investment horizon Edgewell Personal Care is expected to under-perform the Equinix. In addition to that, Edgewell Personal is 1.18 times more volatile than Equinix. It trades about -0.02 of its total potential returns per unit of risk. Equinix is currently generating about 0.11 per unit of volatility. If you would invest  87,274  in Equinix on October 4, 2024 and sell it today you would earn a total of  7,015  from holding Equinix or generate 8.04% return on investment over 90 days.

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

Edgewell Personal Care  vs.  Equinix

Edgewell Personal Care

Risk-Adjusted Performance

0 of 100

Very Weak

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

Equinix

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Equinix are ranked lower than 8 (%) 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 February 2025.

Pair Trading with Edgewell Personal and Equinix

The main advantage of trading using opposite Edgewell Personal and Equinix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edgewell Personal 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 Edgewell Personal Care 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.