Correlation Between Equinix and Phillips Edison

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

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

Diversification Opportunities for Equinix and Phillips Edison

0.67

Correlation Coefficient

Equinix  Phillips Edison

Poor diversification

The 3 months correlation between Equinix and Phillips is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Equinix and Phillips Edison Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phillips Edison 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 Phillips Edison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phillips Edison has no effect on the direction of Equinix i.e., Equinix and Phillips Edison go up and down completely randomly.

Pair Corralation between Equinix and Phillips Edison

Given the investment horizon of 90 days Equinix is expected to under-perform the Phillips Edison. In addition to that, Equinix is 1.35 times more volatile than Phillips Edison Co. It trades about -0.11 of its total potential returns per unit of risk. Phillips Edison Co is currently generating about -0.09 per unit of volatility. If you would invest  3,741  in Phillips Edison Co on December 22, 2024 and sell it today you would lose (248.00) from holding Phillips Edison Co or give up 6.63% of portfolio value over 90 days.

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

Equinix  vs.  Phillips Edison Co

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 latest inconsistent performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Phillips Edison

Risk-Adjusted Performance

Very Weak

Over the last 90 days Phillips Edison Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Equinix and Phillips Edison

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

The idea behind Equinix and Phillips Edison Co 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.