Correlation Between Globus Medical and Orthopediatrics Corp

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

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

Diversification Opportunities for Globus Medical and Orthopediatrics Corp

0.61

Correlation Coefficient

Globus Medical  Orthopediatrics Corp

Poor diversification

The 3 months correlation between Globus and Orthopediatrics is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Globus Medical and Orthopediatrics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orthopediatrics Corp 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 Orthopediatrics Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orthopediatrics Corp has no effect on the direction of Globus Medical i.e., Globus Medical and Orthopediatrics Corp go up and down completely randomly.

Pair Corralation between Globus Medical and Orthopediatrics Corp

Given the investment horizon of 90 days Globus Medical is expected to generate 0.54 times more return on investment than Orthopediatrics Corp. However, Globus Medical is 1.84 times less risky than Orthopediatrics Corp. It trades about -0.04 of its potential returns per unit of risk. Orthopediatrics Corp is currently generating about -0.06 per unit of risk. If you would invest  8,390  in Globus Medical on December 1, 2024 and sell it today you would lose (358.00) from holding Globus Medical or give up 4.27% of portfolio value over 90 days.

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

Globus Medical  vs.  Orthopediatrics Corp

Globus Medical

Risk-Adjusted Performance

Very Weak

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

Orthopediatrics Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Orthopediatrics Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Globus Medical and Orthopediatrics Corp

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

The idea behind Globus Medical and Orthopediatrics Corp 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.