Correlation Between Equinix and GA EXpress

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

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

Diversification Opportunities for Equinix and GA EXpress

-0.52

Correlation Coefficient

Equinix  GA EXpress

Excellent diversification

The 3 months correlation between Equinix and GAEX is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Equinix and GA eXpress in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GA eXpress 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 GA EXpress. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GA eXpress has no effect on the direction of Equinix i.e., Equinix and GA EXpress go up and down completely randomly.

Pair Corralation between Equinix and GA EXpress

Given the investment horizon of 90 days Equinix is expected to generate 0.12 times more return on investment than GA EXpress. However, Equinix is 8.66 times less risky than GA EXpress. It trades about 0.05 of its potential returns per unit of risk. GA eXpress is currently generating about -0.12 per unit of risk. If you would invest  90,831  in Equinix on October 27, 2024 and sell it today you would earn a total of  3,254  from holding Equinix or generate 3.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.75%
Values	Daily Returns

Equinix  vs.  GA eXpress

Equinix

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Equinix are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward indicators, Equinix is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

GA eXpress

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GA eXpress has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Equinix and GA EXpress

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

The idea behind Equinix and GA eXpress 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.