Correlation Between Globus Medical and Second Sight
Can any of the company-specific risk be diversified away by investing in both Globus Medical and Second Sight 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 Second Sight into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globus Medical and Second Sight Medical, you can compare the effects of market volatilities on Globus Medical and Second Sight 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 Second Sight. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globus Medical and Second Sight.
Diversification Opportunities for Globus Medical and Second Sight
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Globus and Second is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Globus Medical and Second Sight Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Second Sight Medical 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 Second Sight. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Second Sight Medical has no effect on the direction of Globus Medical i.e., Globus Medical and Second Sight go up and down completely randomly.
Pair Corralation between Globus Medical and Second Sight
Given the investment horizon of 90 days Globus Medical is expected to generate 0.36 times more return on investment than Second Sight. However, Globus Medical is 2.79 times less risky than Second Sight. It trades about -0.01 of its potential returns per unit of risk. Second Sight Medical is currently generating about -0.02 per unit of risk. If you would invest 6,515 in Globus Medical on January 26, 2024 and sell it today you would lose (1,371) from holding Globus Medical or give up 21.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 16.4% |
| Values | Daily Returns |
Globus Medical vs. Second Sight Medical
Performance |
| Timeline |
| Globus Medical |
| Second Sight Medical |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Globus Medical and Second Sight Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globus Medical and Second Sight
The main advantage of trading using opposite Globus Medical and Second Sight positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globus Medical position performs unexpectedly, Second Sight 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 Second Sight will offset losses from the drop in Second Sight's long position.The idea behind Globus Medical and Second Sight Medical 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.| Second Sight vs. GameStop Corp | Second Sight vs. Boyd Gaming | Second Sight vs. Western Acquisition Ventures | Second Sight vs. Griffon |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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