Correlation Between Edwards Lifesciences and Globus Medical
Can any of the company-specific risk be diversified away by investing in both Edwards Lifesciences and Globus Medical 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 Edwards Lifesciences and Globus Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edwards Lifesciences Corp and Globus Medical, you can compare the effects of market volatilities on Edwards Lifesciences and Globus Medical 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 Edwards Lifesciences with a short position of Globus Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edwards Lifesciences and Globus Medical.
Diversification Opportunities for Edwards Lifesciences and Globus Medical
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Edwards and Globus is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Edwards Lifesciences Corp and Globus Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globus Medical and Edwards Lifesciences 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 Edwards Lifesciences Corp are associated (or correlated) with Globus Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globus Medical has no effect on the direction of Edwards Lifesciences i.e., Edwards Lifesciences and Globus Medical go up and down completely randomly.
Pair Corralation between Edwards Lifesciences and Globus Medical
Allowing for the 90-day total investment horizon Edwards Lifesciences Corp is expected to generate 1.01 times more return on investment than Globus Medical. However, Edwards Lifesciences is 1.01 times more volatile than Globus Medical. It trades about -0.01 of its potential returns per unit of risk. Globus Medical is currently generating about -0.02 per unit of risk. If you would invest 10,085 in Edwards Lifesciences Corp on January 20, 2024 and sell it today you would lose (1,440) from holding Edwards Lifesciences Corp or give up 14.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Edwards Lifesciences Corp vs. Globus Medical
Performance |
| Timeline |
| Edwards Lifesciences Corp |
| Globus Medical |
Edwards Lifesciences and Globus Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edwards Lifesciences and Globus Medical
The main advantage of trading using opposite Edwards Lifesciences and Globus Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edwards Lifesciences position performs unexpectedly, Globus Medical 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 Globus Medical will offset losses from the drop in Globus Medical's long position.| Edwards Lifesciences vs. Agilent Technologies | Edwards Lifesciences vs. Illumina | Edwards Lifesciences vs. IDEXX Laboratories | Edwards Lifesciences vs. Waters |
| Globus Medical vs. Orthofix Medical | Globus Medical vs. CONMED | Globus Medical vs. Alphatec Holdings | Globus Medical vs. LivaNova PLC |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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