Correlation Between GLOBUS MEDICAL and ASSA ABLOY
Can any of the company-specific risk be diversified away by investing in both GLOBUS MEDICAL and ASSA ABLOY 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 ASSA ABLOY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GLOBUS MEDICAL A and ASSA ABLOY AB, you can compare the effects of market volatilities on GLOBUS MEDICAL and ASSA ABLOY 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 ASSA ABLOY. Check out your portfolio center. Please also check ongoing floating volatility patterns of GLOBUS MEDICAL and ASSA ABLOY.
Diversification Opportunities for GLOBUS MEDICAL and ASSA ABLOY
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GLOBUS and ASSA is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding GLOBUS MEDICAL A and ASSA ABLOY AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASSA ABLOY AB 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 A are associated (or correlated) with ASSA ABLOY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASSA ABLOY AB has no effect on the direction of GLOBUS MEDICAL i.e., GLOBUS MEDICAL and ASSA ABLOY go up and down completely randomly.
Pair Corralation between GLOBUS MEDICAL and ASSA ABLOY
Assuming the 90 days trading horizon GLOBUS MEDICAL is expected to generate 2.95 times less return on investment than ASSA ABLOY. In addition to that, GLOBUS MEDICAL is 1.27 times more volatile than ASSA ABLOY AB. It trades about 0.03 of its total potential returns per unit of risk. ASSA ABLOY AB is currently generating about 0.1 per unit of volatility. If you would invest 1,332 in ASSA ABLOY AB on September 30, 2024 and sell it today you would earn a total of 1,513 from holding ASSA ABLOY AB or generate 113.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GLOBUS MEDICAL A vs. ASSA ABLOY AB
Performance |
| Timeline |
| GLOBUS MEDICAL A |
| ASSA ABLOY AB |
GLOBUS MEDICAL and ASSA ABLOY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GLOBUS MEDICAL and ASSA ABLOY
The main advantage of trading using opposite GLOBUS MEDICAL and ASSA ABLOY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GLOBUS MEDICAL position performs unexpectedly, ASSA ABLOY 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 ASSA ABLOY will offset losses from the drop in ASSA ABLOY's long position.The idea behind GLOBUS MEDICAL A and ASSA ABLOY AB 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.| ASSA ABLOY vs. ABB PAR AB | ASSA ABLOY vs. SECOM LTD | ASSA ABLOY vs. Halma plc | ASSA ABLOY vs. Allegion 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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