Correlation Between Equinix and Hawkins

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

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

Diversification Opportunities for Equinix and Hawkins

0.51

Correlation Coefficient

Equinix  Hawkins

Very weak diversification

The 3 months correlation between Equinix and Hawkins is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Equinix and Hawkins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawkins 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 Hawkins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawkins has no effect on the direction of Equinix i.e., Equinix and Hawkins go up and down completely randomly.

Pair Corralation between Equinix and Hawkins

Given the investment horizon of 90 days Equinix is expected to generate 2.93 times less return on investment than Hawkins. But when comparing it to its historical volatility, Equinix is 1.54 times less risky than Hawkins. It trades about 0.06 of its potential returns per unit of risk. Hawkins is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3,786  in Hawkins on September 20, 2024 and sell it today you would earn a total of  8,386  from holding Hawkins or generate 221.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Equinix  vs.  Hawkins

Equinix

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Equinix are ranked lower than 6 (%) 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 January 2025.

Hawkins

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hawkins has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward-looking signals, Hawkins is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Equinix and Hawkins

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

The idea behind Equinix and Hawkins 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.