Correlation Between EDAP TMS and Globus Medical
Can any of the company-specific risk be diversified away by investing in both EDAP TMS 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 EDAP TMS and Globus Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EDAP TMS SA and Globus Medical, you can compare the effects of market volatilities on EDAP TMS 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 EDAP TMS with a short position of Globus Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of EDAP TMS and Globus Medical.
Diversification Opportunities for EDAP TMS and Globus Medical
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between EDAP and Globus is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding EDAP TMS SA and Globus Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globus Medical and EDAP TMS 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 EDAP TMS SA 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 EDAP TMS i.e., EDAP TMS and Globus Medical go up and down completely randomly.
Pair Corralation between EDAP TMS and Globus Medical
Given the investment horizon of 90 days EDAP TMS SA is expected to under-perform the Globus Medical. In addition to that, EDAP TMS is 2.62 times more volatile than Globus Medical. It trades about -0.09 of its total potential returns per unit of risk. Globus Medical is currently generating about 0.18 per unit of volatility. If you would invest 7,218 in Globus Medical on November 2, 2024 and sell it today you would earn a total of 2,094 from holding Globus Medical or generate 29.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EDAP TMS SA vs. Globus Medical
Performance |
| Timeline |
| EDAP TMS SA |
| Globus Medical |
EDAP TMS and Globus Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EDAP TMS and Globus Medical
The main advantage of trading using opposite EDAP TMS and Globus Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EDAP TMS 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.| EDAP TMS vs. Patterson Companies | EDAP TMS vs. Henry Schein | EDAP TMS vs. McKesson | EDAP TMS vs. Cardinal Health |
| 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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