Correlation Between Grand Canyon and Globus Medical
Can any of the company-specific risk be diversified away by investing in both Grand Canyon 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 Grand Canyon and Globus Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grand Canyon Education and Globus Medical, you can compare the effects of market volatilities on Grand Canyon 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 Grand Canyon with a short position of Globus Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Canyon and Globus Medical.
Diversification Opportunities for Grand Canyon and Globus Medical
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Grand and Globus is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Grand Canyon Education and Globus Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globus Medical and Grand Canyon 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 Grand Canyon Education 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 Grand Canyon i.e., Grand Canyon and Globus Medical go up and down completely randomly.
Pair Corralation between Grand Canyon and Globus Medical
Given the investment horizon of 90 days Grand Canyon Education is expected to generate 1.43 times more return on investment than Globus Medical. However, Grand Canyon is 1.43 times more volatile than Globus Medical. It trades about 0.12 of its potential returns per unit of risk. Globus Medical is currently generating about 0.17 per unit of risk. If you would invest 14,181 in Grand Canyon Education on August 25, 2024 and sell it today you would earn a total of 2,464 from holding Grand Canyon Education or generate 17.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.46% |
| Values | Daily Returns |
Grand Canyon Education vs. Globus Medical
Performance |
| Timeline |
| Grand Canyon Education |
| Globus Medical |
Grand Canyon and Globus Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grand Canyon and Globus Medical
The main advantage of trading using opposite Grand Canyon and Globus Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand Canyon 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.| Grand Canyon vs. Laureate Education | Grand Canyon vs. American Public Education | Grand Canyon vs. Lincoln Educational Services | Grand Canyon vs. Adtalem Global Education |
| 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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