Correlation Between Equinix and EPR Properties

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

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

Diversification Opportunities for Equinix and EPR Properties

0.41

Correlation Coefficient

Equinix  EPR Properties

Very weak diversification

The 3 months correlation between Equinix and EPR is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Equinix and EPR Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EPR Properties 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 EPR Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EPR Properties has no effect on the direction of Equinix i.e., Equinix and EPR Properties go up and down completely randomly.

Pair Corralation between Equinix and EPR Properties

Given the investment horizon of 90 days Equinix is expected to under-perform the EPR Properties. In addition to that, Equinix is 1.06 times more volatile than EPR Properties. It trades about -0.44 of its total potential returns per unit of risk. EPR Properties is currently generating about 0.04 per unit of volatility. If you would invest  4,065  in EPR Properties on February 2, 2024 and sell it today you would earn a total of  41.00  from holding EPR Properties or generate 1.01% return on investment over 90 days.

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

Equinix  vs.  EPR Properties

Equinix

Risk-Adjusted Performance

0 of 100

Very Weak

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

EPR Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EPR Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, EPR Properties is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Equinix and EPR Properties

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

The idea behind Equinix and EPR Properties 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.