Correlation Between Globus Medical and Alphatec Holdings
Can any of the company-specific risk be diversified away by investing in both Globus Medical and Alphatec Holdings 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 Alphatec Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globus Medical and Alphatec Holdings, you can compare the effects of market volatilities on Globus Medical and Alphatec Holdings 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 Alphatec Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globus Medical and Alphatec Holdings.
Diversification Opportunities for Globus Medical and Alphatec Holdings
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Globus and Alphatec is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Globus Medical and Alphatec Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphatec Holdings 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 Alphatec Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphatec Holdings has no effect on the direction of Globus Medical i.e., Globus Medical and Alphatec Holdings go up and down completely randomly.
Pair Corralation between Globus Medical and Alphatec Holdings
Given the investment horizon of 90 days Globus Medical is expected to generate 5.04 times less return on investment than Alphatec Holdings. But when comparing it to its historical volatility, Globus Medical is 4.0 times less risky than Alphatec Holdings. It trades about 0.28 of its potential returns per unit of risk. Alphatec Holdings is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 527.00 in Alphatec Holdings on August 28, 2024 and sell it today you would earn a total of 435.00 from holding Alphatec Holdings or generate 82.54% 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. Alphatec Holdings
Performance |
| Timeline |
| Globus Medical |
| Alphatec Holdings |
Globus Medical and Alphatec Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globus Medical and Alphatec Holdings
The main advantage of trading using opposite Globus Medical and Alphatec Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globus Medical position performs unexpectedly, Alphatec Holdings 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 Alphatec Holdings will offset losses from the drop in Alphatec Holdings' long position.| Globus Medical vs. Orthofix Medical | Globus Medical vs. CONMED | Globus Medical vs. Alphatec Holdings | Globus Medical vs. LivaNova PLC |
| Alphatec Holdings vs. Globus Medical | Alphatec Holdings vs. Orthofix Medical | Alphatec Holdings vs. CONMED | Alphatec Holdings 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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