Correlation Between GLOBUS MEDICAL and Boise Cascade

Can any of the company-specific risk be diversified away by investing in both GLOBUS MEDICAL and Boise Cascade 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 Boise Cascade 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 Boise Cascade, you can compare the effects of market volatilities on GLOBUS MEDICAL and Boise Cascade 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 Boise Cascade. Check out your portfolio center. Please also check ongoing floating volatility patterns of GLOBUS MEDICAL and Boise Cascade.

Diversification Opportunities for GLOBUS MEDICAL and Boise Cascade

-0.06

Correlation Coefficient

GLOBUS MEDICAL  Boise Cascade

Good diversification

The 3 months correlation between GLOBUS and Boise is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding GLOBUS MEDICAL A and Boise Cascade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boise Cascade 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 Boise Cascade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boise Cascade has no effect on the direction of GLOBUS MEDICAL i.e., GLOBUS MEDICAL and Boise Cascade go up and down completely randomly.

Pair Corralation between GLOBUS MEDICAL and Boise Cascade

Assuming the 90 days trading horizon GLOBUS MEDICAL A is expected to generate 1.42 times more return on investment than Boise Cascade. However, GLOBUS MEDICAL is 1.42 times more volatile than Boise Cascade. It trades about 0.33 of its potential returns per unit of risk. Boise Cascade is currently generating about 0.2 per unit of risk. If you would invest  7,850  in GLOBUS MEDICAL A on October 24, 2024 and sell it today you would earn a total of  850.00  from holding GLOBUS MEDICAL A or generate 10.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

GLOBUS MEDICAL A  vs.  Boise Cascade

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 fragile technical and fundamental indicators, GLOBUS MEDICAL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Boise Cascade

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Boise Cascade has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Boise Cascade is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with GLOBUS MEDICAL and Boise Cascade

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

The idea behind GLOBUS MEDICAL A and Boise Cascade 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.