Correlation Between Zoom Video and GLOBUS MEDICAL-A

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

By analyzing existing cross correlation between Zoom Video Communications and GLOBUS MEDICAL A, you can compare the effects of market volatilities on Zoom Video and GLOBUS MEDICAL-A 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 Zoom Video with a short position of GLOBUS MEDICAL-A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zoom Video and GLOBUS MEDICAL-A.

Diversification Opportunities for Zoom Video and GLOBUS MEDICAL-A

0.95

Correlation Coefficient

Zoom Video  GLOBUS MEDICAL-A

Almost no diversification

The 3 months correlation between Zoom and GLOBUS is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and GLOBUS MEDICAL A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GLOBUS MEDICAL A and Zoom Video 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 Zoom Video Communications are associated (or correlated) with GLOBUS MEDICAL-A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GLOBUS MEDICAL A has no effect on the direction of Zoom Video i.e., Zoom Video and GLOBUS MEDICAL-A go up and down completely randomly.

Pair Corralation between Zoom Video and GLOBUS MEDICAL-A

Assuming the 90 days trading horizon Zoom Video Communications is expected to under-perform the GLOBUS MEDICAL-A. In addition to that, Zoom Video is 1.22 times more volatile than GLOBUS MEDICAL A. It trades about -0.06 of its total potential returns per unit of risk. GLOBUS MEDICAL A is currently generating about 0.08 per unit of volatility. If you would invest  7,850  in GLOBUS MEDICAL A on October 9, 2024 and sell it today you would earn a total of  150.00  from holding GLOBUS MEDICAL A or generate 1.91% return on investment over 90 days.

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

Zoom Video Communications  vs.  GLOBUS MEDICAL A

Zoom Video Communications

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zoom Video Communications are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Zoom Video unveiled solid returns over the last few months and may actually be approaching a breakup point.

GLOBUS MEDICAL A

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GLOBUS MEDICAL A are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, GLOBUS MEDICAL-A exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zoom Video and GLOBUS MEDICAL-A

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

The idea behind Zoom Video Communications and GLOBUS MEDICAL A 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.

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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.