Correlation Between Equinix and Platinum Investment

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

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

Diversification Opportunities for Equinix and Platinum Investment

-0.8

Correlation Coefficient

Equinix  Platinum Investment

Pay attention - limited upside

The 3 months correlation between Equinix and Platinum is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Equinix and Platinum Investment Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platinum Investment 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 Platinum Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Platinum Investment has no effect on the direction of Equinix i.e., Equinix and Platinum Investment go up and down completely randomly.

Pair Corralation between Equinix and Platinum Investment

Assuming the 90 days trading horizon Equinix is expected to generate 0.49 times more return on investment than Platinum Investment. However, Equinix is 2.05 times less risky than Platinum Investment. It trades about 0.05 of its potential returns per unit of risk. Platinum Investment Management is currently generating about 0.03 per unit of risk. If you would invest  72,752  in Equinix on October 24, 2024 and sell it today you would earn a total of  14,928  from holding Equinix or generate 20.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.6%
Values	Daily Returns

Equinix  vs.  Platinum Investment Management

Equinix

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Equinix are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Equinix may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Platinum Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Platinum Investment Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Platinum Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Equinix and Platinum Investment

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

The idea behind Equinix and Platinum Investment Management 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.