Correlation Between Equinix and CBOA Financial

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

By analyzing existing cross correlation between Equinix and CBOA Financial, you can compare the effects of market volatilities on Equinix and CBOA Financial 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 CBOA Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinix and CBOA Financial.

Diversification Opportunities for Equinix and CBOA Financial

0.0

Correlation Coefficient

Equinix  CBOA Financial

Pay attention - limited upside

The 3 months correlation between Equinix and CBOA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Equinix and CBOA Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBOA Financial 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 CBOA Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBOA Financial has no effect on the direction of Equinix i.e., Equinix and CBOA Financial go up and down completely randomly.

Pair Corralation between Equinix and CBOA Financial

Given the investment horizon of 90 days Equinix is expected to generate 0.46 times more return on investment than CBOA Financial. However, Equinix is 2.17 times less risky than CBOA Financial. It trades about 0.05 of its potential returns per unit of risk. CBOA Financial is currently generating about -0.03 per unit of risk. If you would invest  68,834  in Equinix on October 12, 2024 and sell it today you would earn a total of  26,270  from holding Equinix or generate 38.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	25.45%
Values	Daily Returns

Equinix  vs.  CBOA Financial

Equinix

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Equinix are ranked lower than 10 (%) 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.

CBOA Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CBOA Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CBOA Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Equinix and CBOA Financial

The main advantage of trading using opposite Equinix and CBOA Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinix position performs unexpectedly, CBOA Financial 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 CBOA Financial will offset losses from the drop in CBOA Financial's long position.

The idea behind Equinix and CBOA Financial 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.