Correlation Between Globus Medical, and GoPro

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

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

Diversification Opportunities for Globus Medical, and GoPro

-0.05

Correlation Coefficient

Globus Medical,  GoPro

Good diversification

The 3 months correlation between Globus and GoPro is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Globus Medical, and GoPro Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoPro Inc 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 GoPro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoPro Inc has no effect on the direction of Globus Medical, i.e., Globus Medical, and GoPro go up and down completely randomly.

Pair Corralation between Globus Medical, and GoPro

Assuming the 90 days trading horizon Globus Medical, is expected to generate 0.55 times more return on investment than GoPro. However, Globus Medical, is 1.82 times less risky than GoPro. It trades about 0.2 of its potential returns per unit of risk. GoPro Inc is currently generating about -0.08 per unit of risk. If you would invest  4,900  in Globus Medical, on October 5, 2024 and sell it today you would earn a total of  1,610  from holding Globus Medical, or generate 32.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	17.78%
Values	Daily Returns

Globus Medical,  vs.  GoPro Inc

Globus Medical,

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Globus Medical, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak primary indicators, Globus Medical, sustained solid returns over the last few months and may actually be approaching a breakup point.

GoPro Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GoPro Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, GoPro is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Globus Medical, and GoPro

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

The idea behind Globus Medical, and GoPro Inc 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.