Correlation Between Equinix and National Health

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

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

Diversification Opportunities for Equinix and National Health

-0.81

Correlation Coefficient

Equinix  National Health

Pay attention - limited upside

The 3 months correlation between Equinix and National is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Equinix and National Health Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Health Investors 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 National Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Health Investors has no effect on the direction of Equinix i.e., Equinix and National Health go up and down completely randomly.

Pair Corralation between Equinix and National Health

Given the investment horizon of 90 days Equinix is expected to under-perform the National Health. In addition to that, Equinix is 1.19 times more volatile than National Health Investors. It trades about -0.13 of its total potential returns per unit of risk. National Health Investors is currently generating about 0.1 per unit of volatility. If you would invest  6,802  in National Health Investors on December 29, 2024 and sell it today you would earn a total of  577.00  from holding National Health Investors or generate 8.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Equinix  vs.  National Health Investors

Equinix

Risk-Adjusted Performance

Very Weak

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

National Health Investors

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in National Health Investors are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady technical indicators, National Health may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Equinix and National Health

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

The idea behind Equinix and National Health Investors 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.