Correlation Between Equinix and DATA Communications
Can any of the company-specific risk be diversified away by investing in both Equinix and DATA Communications 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 DATA Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equinix and DATA Communications Management, you can compare the effects of market volatilities on Equinix and DATA Communications 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 DATA Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinix and DATA Communications.
Diversification Opportunities for Equinix and DATA Communications
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Equinix and DATA is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Equinix and DATA Communications Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DATA Communications 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 DATA Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DATA Communications has no effect on the direction of Equinix i.e., Equinix and DATA Communications go up and down completely randomly.
Pair Corralation between Equinix and DATA Communications
Given the investment horizon of 90 days Equinix is expected to under-perform the DATA Communications. But the stock apears to be less risky and, when comparing its historical volatility, Equinix is 1.85 times less risky than DATA Communications. The stock trades about -0.22 of its potential returns per unit of risk. The DATA Communications Management is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 98.00 in DATA Communications Management on August 29, 2025 and sell it today you would earn a total of 18.00 from holding DATA Communications Management or generate 18.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equinix vs. DATA Communications Management
Performance |
| Timeline |
| Equinix |
| DATA Communications |
Equinix and DATA Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equinix and DATA Communications
The main advantage of trading using opposite Equinix and DATA Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinix position performs unexpectedly, DATA Communications 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 DATA Communications will offset losses from the drop in DATA Communications' long position.| Equinix vs. DATA Communications Management | Equinix vs. Astro Communications | Equinix vs. SmarTone Telecommunications Holdings | Equinix vs. PSI Software AG |
| DATA Communications vs. Cintas | DATA Communications vs. Thomson Reuters | DATA Communications vs. Wolters Kluwer NV | DATA Communications vs. Wolters Kluwer NV |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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