Correlation Between Globus Medical, and Capital One

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

By analyzing existing cross correlation between Globus Medical, and Capital One Financial, you can compare the effects of market volatilities on Globus Medical, and Capital One 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 Globus Medical, with a short position of Capital One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globus Medical, and Capital One.

Diversification Opportunities for Globus Medical, and Capital One

0.73

Correlation Coefficient

Globus Medical,  Capital One

Poor diversification

The 3 months correlation between Globus and Capital is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Globus Medical, and Capital One Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital One Financial and Globus Medical, 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 Globus Medical, are associated (or correlated) with Capital One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital One Financial has no effect on the direction of Globus Medical, i.e., Globus Medical, and Capital One go up and down completely randomly.

Pair Corralation between Globus Medical, and Capital One

Assuming the 90 days trading horizon Globus Medical, is expected to under-perform the Capital One. In addition to that, Globus Medical, is 1.05 times more volatile than Capital One Financial. It trades about -0.13 of its total potential returns per unit of risk. Capital One Financial is currently generating about -0.09 per unit of volatility. If you would invest  56,658  in Capital One Financial on December 24, 2024 and sell it today you would lose (6,908) from holding Capital One Financial or give up 12.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

Globus Medical,  vs.  Capital One Financial

Globus Medical,

Risk-Adjusted Performance

Very Weak

Over the last 90 days Globus Medical, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's primary indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Capital One Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Capital One Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Globus Medical, and Capital One

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

The idea behind Globus Medical, and Capital One Financial 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.