Correlation Between GLOBUS MEDICAL and International Business

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

Diversification Opportunities for GLOBUS MEDICAL and International Business

0.48

Correlation Coefficient

GLOBUS MEDICAL  International Business

Very weak diversification

The 3 months correlation between GLOBUS and International is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding GLOBUS MEDICAL A and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business 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 International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of GLOBUS MEDICAL i.e., GLOBUS MEDICAL and International Business go up and down completely randomly.

Pair Corralation between GLOBUS MEDICAL and International Business

Assuming the 90 days trading horizon GLOBUS MEDICAL A is expected to under-perform the International Business. In addition to that, GLOBUS MEDICAL is 1.18 times more volatile than International Business Machines. It trades about -0.1 of its total potential returns per unit of risk. International Business Machines is currently generating about 0.03 per unit of volatility. If you would invest  21,320  in International Business Machines on September 26, 2024 and sell it today you would earn a total of  135.00  from holding International Business Machines or generate 0.63% return on investment over 90 days.

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

GLOBUS MEDICAL A  vs.  International Business Machine

GLOBUS MEDICAL A

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GLOBUS MEDICAL A are ranked lower than 12 (%) 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.

International Business

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in International Business Machines are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain primary indicators, International Business may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with GLOBUS MEDICAL and International Business

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

The idea behind GLOBUS MEDICAL A and International Business Machines 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..