Correlation Between Globus Medical and Edwards Lifesciences
Can any of the company-specific risk be diversified away by investing in both Globus Medical and Edwards Lifesciences 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 Edwards Lifesciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globus Medical and Edwards Lifesciences Corp, you can compare the effects of market volatilities on Globus Medical and Edwards Lifesciences 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 Edwards Lifesciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globus Medical and Edwards Lifesciences.
Diversification Opportunities for Globus Medical and Edwards Lifesciences
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Globus and Edwards is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Globus Medical and Edwards Lifesciences Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edwards Lifesciences Corp 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 Edwards Lifesciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edwards Lifesciences Corp has no effect on the direction of Globus Medical i.e., Globus Medical and Edwards Lifesciences go up and down completely randomly.
Pair Corralation between Globus Medical and Edwards Lifesciences
Given the investment horizon of 90 days Globus Medical is expected to under-perform the Edwards Lifesciences. But the stock apears to be less risky and, when comparing its historical volatility, Globus Medical is 1.02 times less risky than Edwards Lifesciences. The stock trades about -0.02 of its potential returns per unit of risk. The Edwards Lifesciences Corp is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 10,483 in Edwards Lifesciences Corp on January 20, 2024 and sell it today you would lose (1,838) from holding Edwards Lifesciences Corp or give up 17.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Globus Medical vs. Edwards Lifesciences Corp
Performance |
| Timeline |
| Globus Medical |
| Edwards Lifesciences Corp |
Globus Medical and Edwards Lifesciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globus Medical and Edwards Lifesciences
The main advantage of trading using opposite Globus Medical and Edwards Lifesciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globus Medical position performs unexpectedly, Edwards Lifesciences 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 Edwards Lifesciences will offset losses from the drop in Edwards Lifesciences' long position.| Globus Medical vs. Agilent Technologies | Globus Medical vs. Illumina | Globus Medical vs. Waters | Globus Medical vs. Thermo Fisher Scientific |
| Edwards Lifesciences vs. Agilent Technologies | Edwards Lifesciences vs. Illumina | Edwards Lifesciences vs. Waters | Edwards Lifesciences vs. Thermo Fisher Scientific |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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