Correlation Between GLOBUS MEDICAL and Deutsche Wohnen

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

Diversification Opportunities for GLOBUS MEDICAL and Deutsche Wohnen

-0.4

Correlation Coefficient

GLOBUS MEDICAL  Deutsche Wohnen

Very good diversification

The 3 months correlation between GLOBUS and Deutsche is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding GLOBUS MEDICAL A and Deutsche Wohnen SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Wohnen SE 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 Deutsche Wohnen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Wohnen SE has no effect on the direction of GLOBUS MEDICAL i.e., GLOBUS MEDICAL and Deutsche Wohnen go up and down completely randomly.

Pair Corralation between GLOBUS MEDICAL and Deutsche Wohnen

Assuming the 90 days trading horizon GLOBUS MEDICAL A is expected to generate 0.71 times more return on investment than Deutsche Wohnen. However, GLOBUS MEDICAL A is 1.4 times less risky than Deutsche Wohnen. It trades about -0.12 of its potential returns per unit of risk. Deutsche Wohnen SE is currently generating about -0.11 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 Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

GLOBUS MEDICAL A  vs.  Deutsche Wohnen SE

GLOBUS MEDICAL A

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GLOBUS MEDICAL A are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, GLOBUS MEDICAL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Deutsche Wohnen SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Deutsche Wohnen SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Deutsche Wohnen is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with GLOBUS MEDICAL and Deutsche Wohnen

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

The idea behind GLOBUS MEDICAL A and Deutsche Wohnen SE 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.