Correlation Between Apple and GLOBUS MEDICAL

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

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

Diversification Opportunities for Apple and GLOBUS MEDICAL

0.76

Correlation Coefficient

Apple  GLOBUS MEDICAL

Poor diversification

The 3 months correlation between Apple and GLOBUS is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc 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 Apple 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 Apple Inc 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 Apple i.e., Apple and GLOBUS MEDICAL go up and down completely randomly.

Pair Corralation between Apple and GLOBUS MEDICAL

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.59 times more return on investment than GLOBUS MEDICAL. However, Apple Inc is 1.71 times less risky than GLOBUS MEDICAL. It trades about 0.48 of its potential returns per unit of risk. GLOBUS MEDICAL A is currently generating about -0.1 per unit of risk. If you would invest  21,850  in Apple Inc on September 23, 2024 and sell it today you would earn a total of  1,910  from holding Apple Inc or generate 8.74% return on investment over 90 days.

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

Apple Inc  vs.  GLOBUS MEDICAL A

Apple Inc

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Apple exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 uncertain 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 Apple and GLOBUS MEDICAL

The main advantage of trading using opposite Apple and GLOBUS MEDICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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 Apple Inc 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.