Correlation Between Applied Materials and GLOBUS MEDICAL

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

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

Diversification Opportunities for Applied Materials and GLOBUS MEDICAL

-0.73

Correlation Coefficient

Applied Materials  GLOBUS MEDICAL

Pay attention - limited upside

The 3 months correlation between Applied and GLOBUS is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials 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 Applied Materials 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 Applied Materials are associated (or correlated) with GLOBUS MEDICAL. 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 Applied Materials i.e., Applied Materials and GLOBUS MEDICAL go up and down completely randomly.

Pair Corralation between Applied Materials and GLOBUS MEDICAL

Assuming the 90 days horizon Applied Materials is expected to under-perform the GLOBUS MEDICAL. In addition to that, Applied Materials is 1.23 times more volatile than GLOBUS MEDICAL A. It trades about -0.04 of its total potential returns per unit of risk. GLOBUS MEDICAL A is currently generating about -0.02 per unit of volatility. If you would invest  7,950  in GLOBUS MEDICAL A on October 6, 2024 and sell it today you would lose (50.00) from holding GLOBUS MEDICAL A or give up 0.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	94.44%
Values	Daily Returns

Applied Materials  vs.  GLOBUS MEDICAL A

Applied Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Applied Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

GLOBUS MEDICAL A

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GLOBUS MEDICAL A are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, GLOBUS MEDICAL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Applied Materials and GLOBUS MEDICAL

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

The idea behind Applied Materials 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.