Correlation Between Equinix and Hannon Armstrong

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

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

Diversification Opportunities for Equinix and Hannon Armstrong

0.81

Correlation Coefficient

Equinix  Hannon Armstrong

Very poor diversification

The 3 months correlation between Equinix and Hannon is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Equinix and Hannon Armstrong Sustainable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hannon Armstrong Sus 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 Hannon Armstrong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hannon Armstrong Sus has no effect on the direction of Equinix i.e., Equinix and Hannon Armstrong go up and down completely randomly.

Pair Corralation between Equinix and Hannon Armstrong

Given the investment horizon of 90 days Equinix is expected to generate 1.02 times less return on investment than Hannon Armstrong. But when comparing it to its historical volatility, Equinix is 2.13 times less risky than Hannon Armstrong. It trades about 0.05 of its potential returns per unit of risk. Hannon Armstrong Sustainable is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,736  in Hannon Armstrong Sustainable on August 10, 2024 and sell it today you would earn a total of  473.00  from holding Hannon Armstrong Sustainable or generate 17.29% return on investment over 90 days.

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

Equinix  vs.  Hannon Armstrong Sustainable

Equinix

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Equinix are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent forward indicators, Equinix may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Hannon Armstrong Sus

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hannon Armstrong Sustainable are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Hannon Armstrong may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Equinix and Hannon Armstrong

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

The idea behind Equinix and Hannon Armstrong Sustainable 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.