Correlation Between Equinix and Ventas

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

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

Diversification Opportunities for Equinix and Ventas

-0.4

Correlation Coefficient

Equinix  Ventas

Very good diversification

The 3 months correlation between Equinix and Ventas is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Equinix and Ventas Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ventas Inc 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 Ventas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ventas Inc has no effect on the direction of Equinix i.e., Equinix and Ventas go up and down completely randomly.

Pair Corralation between Equinix and Ventas

Given the investment horizon of 90 days Equinix is expected to generate 1.02 times more return on investment than Ventas. However, Equinix is 1.02 times more volatile than Ventas Inc. It trades about 0.08 of its potential returns per unit of risk. Ventas Inc is currently generating about -0.11 per unit of risk. If you would invest  87,776  in Equinix on September 21, 2024 and sell it today you would earn a total of  4,946  from holding Equinix or generate 5.63% return on investment over 90 days.

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

Equinix  vs.  Ventas Inc

Equinix

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Equinix are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. 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.

Ventas Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ventas Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest conflicting 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 Equinix and Ventas

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

The idea behind Equinix and Ventas Inc 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.