Correlation Between Ares Acquisition and Equinix

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Can any of the company-specific risk be diversified away by investing in both Ares Acquisition and Equinix 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 Ares Acquisition and Equinix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ares Acquisition Corp and Equinix, you can compare the effects of market volatilities on Ares Acquisition and Equinix 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 Ares Acquisition with a short position of Equinix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Acquisition and Equinix.

Diversification Opportunities for Ares Acquisition and Equinix

-0.32
  Correlation Coefficient

Very good diversification

The 3 months correlation between Ares Acquisition and Equinix is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Ares Acquisition Corp and Equinix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinix and Ares Acquisition 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 Ares Acquisition Corp are associated (or correlated) with Equinix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equinix has no effect on the direction of Ares Acquisition i.e., Ares Acquisition and Equinix go up and down completely randomly.

Pair Corralation between Ares Acquisition and Equinix

Considering the 90-day investment horizon Ares Acquisition Corp is expected to generate 0.15 times more return on investment than Equinix. However, Ares Acquisition Corp is 6.79 times less risky than Equinix. It trades about 0.01 of its potential returns per unit of risk. Equinix is currently generating about -0.03 per unit of risk. If you would invest  987.00  in Ares Acquisition Corp on July 2, 2022 and sell it today you would earn a total of  4.00  from holding Ares Acquisition Corp or generate 0.41% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy77.42%
ValuesDaily Returns

Ares Acquisition Corp  vs.  Equinix

 Performance (%) 
       Timeline  
Ares Acquisition Corp 
Ares Acquisition Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Ares Acquisition Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Ares Acquisition is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Ares Acquisition Price Channel

Equinix 
Equinix Performance
0 of 100
Over the last 90 days Equinix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in October 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Equinix Price Channel

Ares Acquisition and Equinix Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ares Acquisition and Equinix

The main advantage of trading using opposite Ares Acquisition and Equinix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Acquisition position performs unexpectedly, Equinix 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 Equinix will offset losses from the drop in Equinix's long position.
Ares Acquisition vs. Amazon Inc
The idea behind Ares Acquisition Corp and Equinix 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.
Equinix vs. Amazon Inc
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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