Correlation Between Globus Medical, and Ares Management
Can any of the company-specific risk be diversified away by investing in both Globus Medical, and Ares Management 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 Ares Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globus Medical, and Ares Management, you can compare the effects of market volatilities on Globus Medical, and Ares Management 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 Ares Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globus Medical, and Ares Management.
Diversification Opportunities for Globus Medical, and Ares Management
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Globus and Ares is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Globus Medical, and Ares Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Management 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 Ares Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Management has no effect on the direction of Globus Medical, i.e., Globus Medical, and Ares Management go up and down completely randomly.
Pair Corralation between Globus Medical, and Ares Management
Assuming the 90 days trading horizon Globus Medical, is expected to generate 1.3 times more return on investment than Ares Management. However, Globus Medical, is 1.3 times more volatile than Ares Management. It trades about 0.15 of its potential returns per unit of risk. Ares Management is currently generating about 0.13 per unit of risk. If you would invest 6,432 in Globus Medical, on November 5, 2024 and sell it today you would earn a total of 393.00 from holding Globus Medical, or generate 6.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Globus Medical, vs. Ares Management
Performance |
| Timeline |
| Globus Medical, |
| Ares Management |
Globus Medical, and Ares Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globus Medical, and Ares Management
The main advantage of trading using opposite Globus Medical, and Ares Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globus Medical, position performs unexpectedly, Ares Management 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 Ares Management will offset losses from the drop in Ares Management's long position.| Globus Medical, vs. Taiwan Semiconductor Manufacturing | Globus Medical, vs. Apple Inc | Globus Medical, vs. Alibaba Group Holding | Globus Medical, vs. Microsoft |
| Ares Management vs. Taiwan Semiconductor Manufacturing | Ares Management vs. Apple Inc | Ares Management vs. Alibaba Group Holding | Ares Management vs. Microsoft |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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