Correlation Between GLOBUS MEDICAL and Amazon
Can any of the company-specific risk be diversified away by investing in both GLOBUS MEDICAL and Amazon 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 Amazon 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 Amazon Inc, you can compare the effects of market volatilities on GLOBUS MEDICAL and Amazon 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 Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of GLOBUS MEDICAL and Amazon.
Diversification Opportunities for GLOBUS MEDICAL and Amazon
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GLOBUS and Amazon is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding GLOBUS MEDICAL A and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc 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 Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of GLOBUS MEDICAL i.e., GLOBUS MEDICAL and Amazon go up and down completely randomly.
Pair Corralation between GLOBUS MEDICAL and Amazon
Assuming the 90 days trading horizon GLOBUS MEDICAL is expected to generate 1.52 times less return on investment than Amazon. In addition to that, GLOBUS MEDICAL is 1.11 times more volatile than Amazon Inc. It trades about 0.06 of its total potential returns per unit of risk. Amazon Inc is currently generating about 0.1 per unit of volatility. If you would invest 12,130 in Amazon Inc on September 23, 2024 and sell it today you would earn a total of 9,455 from holding Amazon Inc or generate 77.95% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
GLOBUS MEDICAL A vs. Amazon Inc
Performance |
Timeline |
GLOBUS MEDICAL A |
Amazon Inc |
GLOBUS MEDICAL and Amazon Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GLOBUS MEDICAL and Amazon
The main advantage of trading using opposite GLOBUS MEDICAL and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GLOBUS MEDICAL position performs unexpectedly, Amazon 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 Amazon will offset losses from the drop in Amazon's long position.GLOBUS MEDICAL vs. Apple Inc | GLOBUS MEDICAL vs. Apple Inc | GLOBUS MEDICAL vs. Apple Inc | GLOBUS MEDICAL vs. Apple Inc |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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