Correlation Between GLOBUS MEDICAL and NexGen Energy
Can any of the company-specific risk be diversified away by investing in both GLOBUS MEDICAL and NexGen Energy 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 NexGen Energy 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 NexGen Energy, you can compare the effects of market volatilities on GLOBUS MEDICAL and NexGen Energy 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 NexGen Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of GLOBUS MEDICAL and NexGen Energy.
Diversification Opportunities for GLOBUS MEDICAL and NexGen Energy
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GLOBUS and NexGen is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding GLOBUS MEDICAL A and NexGen Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexGen Energy 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 A are associated (or correlated) with NexGen Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NexGen Energy has no effect on the direction of GLOBUS MEDICAL i.e., GLOBUS MEDICAL and NexGen Energy go up and down completely randomly.
Pair Corralation between GLOBUS MEDICAL and NexGen Energy
Assuming the 90 days trading horizon GLOBUS MEDICAL A is expected to generate 0.47 times more return on investment than NexGen Energy. However, GLOBUS MEDICAL A is 2.11 times less risky than NexGen Energy. It trades about -0.12 of its potential returns per unit of risk. NexGen Energy is currently generating about -0.44 per unit of risk. If you would invest 8,100 in GLOBUS MEDICAL A on September 24, 2024 and sell it today you would lose (300.00) from holding GLOBUS MEDICAL A or give up 3.7% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
GLOBUS MEDICAL A vs. NexGen Energy
Performance |
Timeline |
GLOBUS MEDICAL A |
NexGen Energy |
GLOBUS MEDICAL and NexGen Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GLOBUS MEDICAL and NexGen Energy
The main advantage of trading using opposite GLOBUS MEDICAL and NexGen Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GLOBUS MEDICAL position performs unexpectedly, NexGen Energy 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 NexGen Energy will offset losses from the drop in NexGen Energy's long position.GLOBUS MEDICAL vs. Apple Inc | GLOBUS MEDICAL vs. Apple Inc | GLOBUS MEDICAL vs. Apple Inc | GLOBUS MEDICAL vs. Microsoft |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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