Correlation Between Couchbase and Equity Residential

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

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

Diversification Opportunities for Couchbase and Equity Residential

-0.65

Correlation Coefficient

Couchbase  Equity Residential

Excellent diversification

The 3 months correlation between Couchbase and Equity is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Couchbase and Equity Residential in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Residential and Couchbase 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 Couchbase are associated (or correlated) with Equity Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Residential has no effect on the direction of Couchbase i.e., Couchbase and Equity Residential go up and down completely randomly.

Pair Corralation between Couchbase and Equity Residential

Given the investment horizon of 90 days Couchbase is expected to generate 3.07 times more return on investment than Equity Residential. However, Couchbase is 3.07 times more volatile than Equity Residential. It trades about 0.12 of its potential returns per unit of risk. Equity Residential is currently generating about -0.12 per unit of risk. If you would invest  1,877  in Couchbase on May 16, 2025 and sell it today you would earn a total of  556.00  from holding Couchbase or generate 29.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Couchbase  vs.  Equity Residential

Couchbase

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Couchbase are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Couchbase exhibited solid returns over the last few months and may actually be approaching a breakup point.

Equity Residential

Risk-Adjusted Performance

Weakest

Over the last 90 days Equity Residential has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest uncertain performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Couchbase and Equity Residential

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

The idea behind Couchbase and Equity Residential 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.