Correlation Between Equinix and Truxton

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

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

Diversification Opportunities for Equinix and Truxton

0.65

Correlation Coefficient

Equinix  Truxton

Poor diversification

The 3 months correlation between Equinix and Truxton is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Equinix and Truxton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Truxton 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 Truxton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Truxton has no effect on the direction of Equinix i.e., Equinix and Truxton go up and down completely randomly.

Pair Corralation between Equinix and Truxton

Given the investment horizon of 90 days Equinix is expected to generate 0.66 times more return on investment than Truxton. However, Equinix is 1.51 times less risky than Truxton. It trades about 0.05 of its potential returns per unit of risk. Truxton is currently generating about 0.03 per unit of risk. If you would invest  67,531  in Equinix on October 10, 2024 and sell it today you would earn a total of  26,476  from holding Equinix or generate 39.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	89.52%
Values	Daily Returns

Equinix  vs.  Truxton

Equinix

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Equinix are ranked lower than 8 (%) 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 February 2025.

Truxton

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Truxton has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Truxton is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Equinix and Truxton

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

The idea behind Equinix and Truxton 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.