Correlation Between Equinix and Acadia Realty

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Can any of the company-specific risk be diversified away by investing in both Equinix and Acadia Realty 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 Equinix and Acadia Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equinix and Acadia Realty Trust, you can compare the effects of market volatilities on Equinix and Acadia Realty 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 Equinix with a short position of Acadia Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinix and Acadia Realty.

Diversification Opportunities for Equinix and Acadia Realty

0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between Equinix and Acadia is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Equinix and Acadia Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acadia Realty Trust and Equinix 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 Equinix are associated (or correlated) with Acadia Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acadia Realty Trust has no effect on the direction of Equinix i.e., Equinix and Acadia Realty go up and down completely randomly.

Pair Corralation between Equinix and Acadia Realty

Given the investment horizon of 90 days Equinix is expected to generate 1.01 times more return on investment than Acadia Realty. However, Equinix is 1.01 times more volatile than Acadia Realty Trust. It trades about -0.08 of its potential returns per unit of risk. Acadia Realty Trust is currently generating about -0.15 per unit of risk. If you would invest  96,365  in Equinix on October 4, 2024 and sell it today you would lose (2,076) from holding Equinix or give up 2.15% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.45%
ValuesDaily Returns

Equinix  vs.  Acadia Realty Trust

 Performance 
       Timeline  
Equinix 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
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.
Acadia Realty Trust 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Acadia Realty Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward-looking signals, Acadia Realty is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Equinix and Acadia Realty Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Equinix and Acadia Realty

The main advantage of trading using opposite Equinix and Acadia Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinix position performs unexpectedly, Acadia Realty 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 Acadia Realty will offset losses from the drop in Acadia Realty's long position.
The idea behind Equinix and Acadia Realty Trust 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.
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

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