Correlation Between Equinix and Great Ajax

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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 Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Equinix  vs.  Great Ajax Corp

 Performance 
       Timeline  
Equinix 

Risk-Adjusted Performance

2 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Equinix are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward indicators, Equinix is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.
Great Ajax Corp 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Great Ajax Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's forward-looking indicators remain fairly strong which may send shares a bit higher in April 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

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.
The idea behind Equinix and Great Ajax Corp 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 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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