Correlation Between GLOBUS MEDICAL-A and Philip Morris

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

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

Diversification Opportunities for GLOBUS MEDICAL-A and Philip Morris

0.75

Correlation Coefficient

GLOBUS MEDICAL-A  Philip Morris

Poor diversification

The 3 months correlation between GLOBUS and Philip is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding GLOBUS MEDICAL A and Philip Morris International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Philip Morris Intern and GLOBUS MEDICAL-A 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 A are associated (or correlated) with Philip Morris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Philip Morris Intern has no effect on the direction of GLOBUS MEDICAL-A i.e., GLOBUS MEDICAL-A and Philip Morris go up and down completely randomly.

Pair Corralation between GLOBUS MEDICAL-A and Philip Morris

Assuming the 90 days trading horizon GLOBUS MEDICAL A is expected to generate 2.18 times more return on investment than Philip Morris. However, GLOBUS MEDICAL-A is 2.18 times more volatile than Philip Morris International. It trades about 0.13 of its potential returns per unit of risk. Philip Morris International is currently generating about -0.32 per unit of risk. If you would invest  7,800  in GLOBUS MEDICAL A on October 11, 2024 and sell it today you would earn a total of  250.00  from holding GLOBUS MEDICAL A or generate 3.21% return on investment over 90 days.

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

GLOBUS MEDICAL A  vs.  Philip Morris International

GLOBUS MEDICAL A

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GLOBUS MEDICAL A are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, GLOBUS MEDICAL-A exhibited solid returns over the last few months and may actually be approaching a breakup point.

Philip Morris Intern

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Philip Morris International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Philip Morris may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with GLOBUS MEDICAL-A and Philip Morris

The main advantage of trading using opposite GLOBUS MEDICAL-A and Philip Morris positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GLOBUS MEDICAL-A position performs unexpectedly, Philip Morris 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 Philip Morris will offset losses from the drop in Philip Morris' long position.

The idea behind GLOBUS MEDICAL A and Philip Morris International 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.