Correlation Between Equinix and Emerson Radio

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

Diversification Opportunities for Equinix and Emerson Radio

EquinixEmersonDiversified AwayEquinixEmersonDiversified Away100%
-0.71
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Equinix and Emerson is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Equinix and Emerson Radio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Radio 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 Emerson Radio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerson Radio has no effect on the direction of Equinix i.e., Equinix and Emerson Radio go up and down completely randomly.

Pair Corralation between Equinix and Emerson Radio

Given the investment horizon of 90 days Equinix is expected to generate 1.75 times less return on investment than Emerson Radio. But when comparing it to its historical volatility, Equinix is 3.02 times less risky than Emerson Radio. It trades about 0.05 of its potential returns per unit of risk. Emerson Radio is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  51.00  in Emerson Radio on October 26, 2024 and sell it today you would earn a total of  1.00  from holding Emerson Radio or generate 1.96% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Equinix  vs.  Emerson Radio

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -20-15-10-50510
JavaScript chart by amCharts 3.21.15EQIX MSN
       Timeline  
Equinix 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
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.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan8809009209409609801,000
Emerson Radio 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Emerson Radio are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Emerson Radio may actually be approaching a critical reversion point that can send shares even higher in February 2025.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan0.350.40.450.50.55

Equinix and Emerson Radio Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.48-3.35-2.23-1.10.01.112.273.434.65.76 0.050.100.150.20
JavaScript chart by amCharts 3.21.15EQIX MSN
       Returns  

Pair Trading with Equinix and Emerson Radio

The main advantage of trading using opposite Equinix and Emerson Radio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinix position performs unexpectedly, Emerson Radio 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 Emerson Radio will offset losses from the drop in Emerson Radio's long position.
The idea behind Equinix and Emerson Radio 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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