Correlation Between Equinix and FDO INV

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

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

Diversification Opportunities for Equinix and FDO INV

0.52

Correlation Coefficient

Equinix  FDO INV

Very weak diversification

The 3 months correlation between Equinix and FDO is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Equinix and FDO INV IMOB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FDO INV IMOB 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 FDO INV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FDO INV IMOB has no effect on the direction of Equinix i.e., Equinix and FDO INV go up and down completely randomly.

Pair Corralation between Equinix and FDO INV

Assuming the 90 days trading horizon Equinix is expected to generate 4.25 times more return on investment than FDO INV. However, Equinix is 4.25 times more volatile than FDO INV IMOB. It trades about 0.2 of its potential returns per unit of risk. FDO INV IMOB is currently generating about 0.14 per unit of risk. If you would invest  5,963  in Equinix on October 7, 2024 and sell it today you would earn a total of  1,508  from holding Equinix or generate 25.29% return on investment over 90 days.

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

Equinix  vs.  FDO INV IMOB

Equinix

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Equinix are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Equinix sustained solid returns over the last few months and may actually be approaching a breakup point.

FDO INV IMOB

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FDO INV IMOB are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, FDO INV 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 FDO INV

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

The idea behind Equinix and FDO INV IMOB 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.