Correlation Between Equinix and Camden Property

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

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

Diversification Opportunities for Equinix and Camden Property

0.32

Correlation Coefficient

Equinix  Camden Property

Weak diversification

The 1 month correlation between Equinix and Camden is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Equinix and Camden Property Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camden Property Trust 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 Camden Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camden Property Trust has no effect on the direction of Equinix i.e., Equinix and Camden Property go up and down completely randomly.

Pair Corralation between Equinix and Camden Property

Given the investment horizon of 90 days Equinix is expected to under-perform the Camden Property. But the stock apears to be less risky and, when comparing its historical volatility, Equinix is 1.06 times less risky than Camden Property. The stock trades about -0.1 of its potential returns per unit of risk. The Camden Property Trust is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  10,674  in Camden Property Trust on March 12, 2024 and sell it today you would lose (5.00) from holding Camden Property Trust or give up 0.05% of portfolio value over 90 days.

Time Period	1 Month [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Equinix  vs.  Camden Property Trust

Equinix

Risk-Adjusted Performance

0 of 100

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 latest fragile performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Camden Property Trust

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Camden Property Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Camden Property is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Equinix and Camden Property

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

The idea behind Equinix and Camden Property Trust 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.