Correlation Between Globus Medical, and Costco Wholesale

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

By analyzing existing cross correlation between Globus Medical, and Costco Wholesale, you can compare the effects of market volatilities on Globus Medical, and Costco Wholesale 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 Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globus Medical, and Costco Wholesale.

Diversification Opportunities for Globus Medical, and Costco Wholesale

0.85

Correlation Coefficient

Globus Medical,  Costco Wholesale

Very poor diversification

The 3 months correlation between Globus and Costco is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Globus Medical, and Costco Wholesale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costco Wholesale 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 Costco Wholesale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Costco Wholesale has no effect on the direction of Globus Medical, i.e., Globus Medical, and Costco Wholesale go up and down completely randomly.

Pair Corralation between Globus Medical, and Costco Wholesale

Assuming the 90 days trading horizon Globus Medical, is expected to generate 1.06 times more return on investment than Costco Wholesale. However, Globus Medical, is 1.06 times more volatile than Costco Wholesale. It trades about 0.19 of its potential returns per unit of risk. Costco Wholesale is currently generating about 0.11 per unit of risk. If you would invest  4,900  in Globus Medical, on October 20, 2024 and sell it today you would earn a total of  2,016  from holding Globus Medical, or generate 41.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	81.45%
Values	Daily Returns

Globus Medical,  vs.  Costco Wholesale

Globus Medical,

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Globus Medical, are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Globus Medical, sustained solid returns over the last few months and may actually be approaching a breakup point.

Costco Wholesale

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Costco Wholesale are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Costco Wholesale sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Globus Medical, and Costco Wholesale

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

The idea behind Globus Medical, and Costco Wholesale 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.

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 the Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.