Correlation Between Equinix and Zedge

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

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

Diversification Opportunities for Equinix and Zedge

0.76

Correlation Coefficient

Equinix  Zedge

Poor diversification

The 3 months correlation between Equinix and Zedge is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Equinix and Zedge Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zedge Inc 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 Zedge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zedge Inc has no effect on the direction of Equinix i.e., Equinix and Zedge go up and down completely randomly.

Pair Corralation between Equinix and Zedge

Given the investment horizon of 90 days Equinix is expected to generate 0.52 times more return on investment than Zedge. However, Equinix is 1.9 times less risky than Zedge. It trades about -0.13 of its potential returns per unit of risk. Zedge Inc is currently generating about -0.07 per unit of risk. If you would invest  93,109  in Equinix on December 28, 2024 and sell it today you would lose (12,809) from holding Equinix or give up 13.76% of portfolio value over 90 days.

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

Equinix  vs.  Zedge Inc

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.

Zedge Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zedge Inc 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 technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Equinix and Zedge

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

The idea behind Equinix and Zedge Inc 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.