Correlation Between COPT Defense and Equinix

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

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

Diversification Opportunities for COPT Defense and Equinix

0.64

Correlation Coefficient

COPT Defense  Equinix

Poor diversification

The 3 months correlation between COPT and Equinix is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding COPT Defense Properties and Equinix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinix and COPT Defense 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 COPT Defense Properties 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 COPT Defense i.e., COPT Defense and Equinix go up and down completely randomly.

Pair Corralation between COPT Defense and Equinix

Considering the 90-day investment horizon COPT Defense Properties is expected to under-perform the Equinix. But the stock apears to be less risky and, when comparing its historical volatility, COPT Defense Properties is 1.34 times less risky than Equinix. The stock trades about -0.08 of its potential returns per unit of risk. The Equinix is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  91,027  in Equinix on February 3, 2025 and sell it today you would lose (3,442) from holding Equinix or give up 3.78% of portfolio value over 90 days.

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

COPT Defense Properties  vs.  Equinix

COPT Defense Properties

Risk-Adjusted Performance

Very Weak

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

Equinix

Risk-Adjusted Performance

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 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.

Pair Trading with COPT Defense and Equinix

The main advantage of trading using opposite COPT Defense and Equinix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COPT Defense 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 COPT Defense Properties 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.