Correlation Between American Healthcare and Equinix

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

By analyzing existing cross correlation between American Healthcare REIT, and Equinix, you can compare the effects of market volatilities on American Healthcare and Equinix 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 American Healthcare with a short position of Equinix. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Healthcare and Equinix.

Diversification Opportunities for American Healthcare and Equinix

0.91

Correlation Coefficient

American Healthcare  Equinix

Almost no diversification

The 3 months correlation between American and Equinix is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding American Healthcare REIT, and Equinix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinix and American Healthcare 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 American Healthcare REIT, are associated (or correlated) with Equinix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equinix has no effect on the direction of American Healthcare i.e., American Healthcare and Equinix go up and down completely randomly.

Pair Corralation between American Healthcare and Equinix

Considering the 90-day investment horizon American Healthcare REIT, is expected to generate 0.97 times more return on investment than Equinix. However, American Healthcare REIT, is 1.03 times less risky than Equinix. It trades about 0.28 of its potential returns per unit of risk. Equinix is currently generating about 0.06 per unit of risk. If you would invest  1,265  in American Healthcare REIT, on June 23, 2024 and sell it today you would earn a total of  1,303  from holding American Healthcare REIT, or generate 103.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	31.72%
Values	Daily Returns

American Healthcare REIT,  vs.  Equinix

American Healthcare REIT,

Risk-Adjusted Performance

41 of 100

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in American Healthcare REIT, are ranked lower than 41 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical indicators, American Healthcare reported solid returns over the last few months and may actually be approaching a breakup point.

Equinix

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Equinix are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent forward indicators, Equinix showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with American Healthcare and Equinix

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

The idea behind American Healthcare REIT, and Equinix 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 Commodity Directory module to find actively traded commodities issued by global exchanges.