Correlation Between Equinix and W P

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

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

Diversification Opportunities for Equinix and W P

-0.61

Correlation Coefficient

Equinix  W P

Excellent diversification

The 3 months correlation between Equinix and WPC is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Equinix and W P Carey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on W P Carey 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 W P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of W P Carey has no effect on the direction of Equinix i.e., Equinix and W P go up and down completely randomly.

Pair Corralation between Equinix and W P

Given the investment horizon of 90 days Equinix is expected to under-perform the W P. In addition to that, Equinix is 1.26 times more volatile than W P Carey. It trades about -0.11 of its total potential returns per unit of risk. W P Carey is currently generating about 0.19 per unit of volatility. If you would invest  5,372  in W P Carey on December 28, 2024 and sell it today you would earn a total of  869.00  from holding W P Carey or generate 16.18% return on investment over 90 days.

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

Equinix  vs.  W P Carey

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.

W P Carey

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in W P Carey are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, W P exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Equinix and W P

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

The idea behind Equinix and W P Carey 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.