Correlation Between Globus Medical and Novocure
Can any of the company-specific risk be diversified away by investing in both Globus Medical and Novocure 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 Novocure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globus Medical and Novocure, you can compare the effects of market volatilities on Globus Medical and Novocure 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 Novocure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globus Medical and Novocure.
Diversification Opportunities for Globus Medical and Novocure
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Globus and Novocure is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Globus Medical and Novocure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novocure 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 Novocure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novocure has no effect on the direction of Globus Medical i.e., Globus Medical and Novocure go up and down completely randomly.
Pair Corralation between Globus Medical and Novocure
Given the investment horizon of 90 days Globus Medical is expected to under-perform the Novocure. But the stock apears to be less risky and, when comparing its historical volatility, Globus Medical is 2.98 times less risky than Novocure. The stock trades about -0.18 of its potential returns per unit of risk. The Novocure is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,418 in Novocure on February 7, 2024 and sell it today you would earn a total of 137.00 from holding Novocure or generate 9.66% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Globus Medical vs. Novocure
Performance |
Timeline |
Globus Medical |
Novocure |
Globus Medical and Novocure Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Globus Medical and Novocure
The main advantage of trading using opposite Globus Medical and Novocure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globus Medical position performs unexpectedly, Novocure 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 Novocure will offset losses from the drop in Novocure's long position.Globus Medical vs. Us Global Nanospace | Globus Medical vs. MidCap Financial Investment | Globus Medical vs. Nuveen Core Plus | Globus Medical vs. Sono Tek Corp |
Novocure vs. Us Global Nanospace | Novocure vs. MidCap Financial Investment | Novocure vs. Nuveen Core Plus | Novocure vs. Sono Tek Corp |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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