Correlation Between Equinix and Great Ajax
Can any of the company-specific risk be diversified away by investing in both Equinix and Great Ajax 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 Great Ajax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equinix and Great Ajax Corp, you can compare the effects of market volatilities on Equinix and Great Ajax 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 Great Ajax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinix and Great Ajax.
Diversification Opportunities for Equinix and Great Ajax
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Equinix and Great is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Equinix and Great Ajax Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Ajax Corp 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 Great Ajax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Ajax Corp has no effect on the direction of Equinix i.e., Equinix and Great Ajax go up and down completely randomly.
Pair Corralation between Equinix and Great Ajax
Given the investment horizon of 90 days Equinix is expected to generate 0.51 times more return on investment than Great Ajax. However, Equinix is 1.96 times less risky than Great Ajax. It trades about -0.16 of its potential returns per unit of risk. Great Ajax Corp is currently generating about -0.12 per unit of risk. If you would invest 87,305 in Equinix on December 29, 2023 and sell it today you would lose (4,772) from holding Equinix or give up 5.47% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Equinix vs. Great Ajax Corp
Performance |
Timeline |
Equinix |
Great Ajax Corp |
Equinix and Great Ajax Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Equinix and Great Ajax
The main advantage of trading using opposite Equinix and Great Ajax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinix position performs unexpectedly, Great Ajax 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 Great Ajax will offset losses from the drop in Great Ajax's long position.Equinix vs. Iridium Communications | Equinix vs. Tesla Inc | Equinix vs. Kenon Holdings | Equinix vs. Anterix |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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