Correlation Between Globus Medical, and Target

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

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

Diversification Opportunities for Globus Medical, and Target

-0.55

Correlation Coefficient

Globus Medical,  Target

Excellent diversification

The 3 months correlation between Globus and Target is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Globus Medical, and Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target 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 Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target has no effect on the direction of Globus Medical, i.e., Globus Medical, and Target go up and down completely randomly.

Pair Corralation between Globus Medical, and Target

Assuming the 90 days trading horizon Globus Medical, is expected to generate 0.7 times more return on investment than Target. However, Globus Medical, is 1.43 times less risky than Target. It trades about 0.19 of its potential returns per unit of risk. Target is currently generating about 0.04 per unit of risk. If you would invest  4,900  in Globus Medical, on October 22, 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 Against
Strength	Very Weak
Accuracy	45.95%
Values	Daily Returns

Globus Medical,  vs.  Target

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.

Target

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Target has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak 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 Target

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

The idea behind Globus Medical, and Target 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.