Correlation Between Equinix and EPR Properties

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

Diversification Opportunities for Equinix and EPR Properties

-0.47
  Correlation Coefficient

Very good diversification

The 3 months correlation between Equinix and EPR is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Equinix and EPR Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EPR Properties 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 EPR Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EPR Properties has no effect on the direction of Equinix i.e., Equinix and EPR Properties go up and down completely randomly.

Pair Corralation between Equinix and EPR Properties

Given the investment horizon of 90 days Equinix is expected to generate 1.07 times more return on investment than EPR Properties. However, Equinix is 1.07 times more volatile than EPR Properties. It trades about 0.24 of its potential returns per unit of risk. EPR Properties is currently generating about -0.04 per unit of risk. If you would invest  82,822  in Equinix on September 2, 2024 and sell it today you would earn a total of  15,326  from holding Equinix or generate 18.5% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Equinix  vs.  EPR Properties

 Performance 
       Timeline  
Equinix 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Equinix are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent forward indicators, Equinix showed solid returns over the last few months and may actually be approaching a breakup point.
EPR Properties 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days EPR Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, EPR Properties is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Equinix and EPR Properties Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Equinix and EPR Properties

The main advantage of trading using opposite Equinix and EPR Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinix position performs unexpectedly, EPR Properties 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 EPR Properties will offset losses from the drop in EPR Properties' long position.
The idea behind Equinix and EPR Properties 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..

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