Correlation Between Equinix and LESTE FDO

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

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

Diversification Opportunities for Equinix and LESTE FDO

-0.82

Correlation Coefficient

Equinix  LESTE FDO

Pay attention - limited upside

The 3 months correlation between Equinix and LESTE is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Equinix and LESTE FDO INV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LESTE FDO INV 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 LESTE FDO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LESTE FDO INV has no effect on the direction of Equinix i.e., Equinix and LESTE FDO go up and down completely randomly.

Pair Corralation between Equinix and LESTE FDO

Assuming the 90 days trading horizon Equinix is expected to generate 0.76 times more return on investment than LESTE FDO. However, Equinix is 1.31 times less risky than LESTE FDO. It trades about 0.03 of its potential returns per unit of risk. LESTE FDO INV is currently generating about -0.06 per unit of risk. If you would invest  7,420  in Equinix on October 7, 2024 and sell it today you would earn a total of  51.00  from holding Equinix or generate 0.69% return on investment over 90 days.

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

Equinix  vs.  LESTE FDO INV

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.

LESTE FDO INV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LESTE FDO INV has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Equinix and LESTE FDO

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

The idea behind Equinix and LESTE FDO INV 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.