Correlation Between GLOBUS MEDICAL and MSA Safety
Can any of the company-specific risk be diversified away by investing in both GLOBUS MEDICAL and MSA Safety 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 MSA Safety 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 MSA Safety Incorporated, you can compare the effects of market volatilities on GLOBUS MEDICAL and MSA Safety 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 MSA Safety. Check out your portfolio center. Please also check ongoing floating volatility patterns of GLOBUS MEDICAL and MSA Safety.
Diversification Opportunities for GLOBUS MEDICAL and MSA Safety
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GLOBUS and MSA is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding GLOBUS MEDICAL A and MSA Safety Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSA Safety 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 MSA Safety. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSA Safety has no effect on the direction of GLOBUS MEDICAL i.e., GLOBUS MEDICAL and MSA Safety go up and down completely randomly.
Pair Corralation between GLOBUS MEDICAL and MSA Safety
Assuming the 90 days trading horizon GLOBUS MEDICAL A is expected to generate 1.0 times more return on investment than MSA Safety. However, GLOBUS MEDICAL is 1.0 times more volatile than MSA Safety Incorporated. It trades about 0.03 of its potential returns per unit of risk. MSA Safety Incorporated is currently generating about -0.08 per unit of risk. If you would invest 8,000 in GLOBUS MEDICAL A on September 30, 2024 and sell it today you would earn a total of 50.00 from holding GLOBUS MEDICAL A or generate 0.63% 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. MSA Safety Incorporated
Performance |
| Timeline |
| GLOBUS MEDICAL A |
| MSA Safety |
GLOBUS MEDICAL and MSA Safety Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GLOBUS MEDICAL and MSA Safety
The main advantage of trading using opposite GLOBUS MEDICAL and MSA Safety positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GLOBUS MEDICAL position performs unexpectedly, MSA Safety 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 MSA Safety will offset losses from the drop in MSA Safety's long position.The idea behind GLOBUS MEDICAL A and MSA Safety Incorporated 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.| MSA Safety vs. ABB PAR AB | MSA Safety vs. ASSA ABLOY AB | MSA Safety vs. SECOM LTD | MSA Safety vs. Halma 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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