Correlation Between Equinix and Gladstone Land

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

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

Diversification Opportunities for Equinix and Gladstone Land

-0.86

Correlation Coefficient

Equinix  Gladstone Land

Pay attention - limited upside

The 3 months correlation between Equinix and Gladstone is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Equinix and Gladstone Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Land 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 Gladstone Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Land has no effect on the direction of Equinix i.e., Equinix and Gladstone Land go up and down completely randomly.

Pair Corralation between Equinix and Gladstone Land

Given the investment horizon of 90 days Equinix is expected to generate 0.95 times more return on investment than Gladstone Land. However, Equinix is 1.06 times less risky than Gladstone Land. It trades about 0.17 of its potential returns per unit of risk. Gladstone Land is currently generating about -0.34 per unit of risk. If you would invest  85,689  in Equinix on September 18, 2024 and sell it today you would earn a total of  10,109  from holding Equinix or generate 11.8% return on investment over 90 days.

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

Equinix  vs.  Gladstone Land

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 January 2025.

Gladstone Land

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gladstone Land 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 basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Equinix and Gladstone Land

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

The idea behind Equinix and Gladstone Land 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.