Correlation Between Globus Medical and Establishment Labs
Can any of the company-specific risk be diversified away by investing in both Globus Medical and Establishment Labs 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 Establishment Labs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globus Medical and Establishment Labs Holdings, you can compare the effects of market volatilities on Globus Medical and Establishment Labs 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 Establishment Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globus Medical and Establishment Labs.
Diversification Opportunities for Globus Medical and Establishment Labs
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Globus and Establishment is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Globus Medical and Establishment Labs Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Establishment Labs 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 Establishment Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Establishment Labs has no effect on the direction of Globus Medical i.e., Globus Medical and Establishment Labs go up and down completely randomly.
Pair Corralation between Globus Medical and Establishment Labs
Given the investment horizon of 90 days Globus Medical is expected to generate 11.57 times less return on investment than Establishment Labs. But when comparing it to its historical volatility, Globus Medical is 2.33 times less risky than Establishment Labs. It trades about 0.01 of its potential returns per unit of risk. Establishment Labs Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 4,776 in Establishment Labs Holdings on January 25, 2024 and sell it today you would earn a total of 193.00 from holding Establishment Labs Holdings or generate 4.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Globus Medical vs. Establishment Labs Holdings
Performance |
| Timeline |
| Globus Medical |
| Establishment Labs |
Globus Medical and Establishment Labs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globus Medical and Establishment Labs
The main advantage of trading using opposite Globus Medical and Establishment Labs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globus Medical position performs unexpectedly, Establishment Labs 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 Establishment Labs will offset losses from the drop in Establishment Labs' long position.| Globus Medical vs. HealthStream | Globus Medical vs. National Research Corp | Globus Medical vs. HealthEquity | Globus Medical vs. Health Catalyst |
| Establishment Labs vs. HealthStream | Establishment Labs vs. National Research Corp | Establishment Labs vs. HealthEquity | Establishment Labs vs. Health Catalyst |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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