Correlation Between Microsoft and Globus Medical
Can any of the company-specific risk be diversified away by investing in both Microsoft 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 Microsoft and Globus Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Globus Medical, you can compare the effects of market volatilities on Microsoft 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 Microsoft with a short position of Globus Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Globus Medical.
Diversification Opportunities for Microsoft and Globus Medical
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Globus is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Globus Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globus Medical and Microsoft 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 Microsoft 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 Microsoft i.e., Microsoft and Globus Medical go up and down completely randomly.
Pair Corralation between Microsoft and Globus Medical
Given the investment horizon of 90 days Microsoft is expected to under-perform the Globus Medical. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.36 times less risky than Globus Medical. The stock trades about -0.03 of its potential returns per unit of risk. The Globus Medical is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 7,389 in Globus Medical on August 24, 2024 and sell it today you would earn a total of 1,083 from holding Globus Medical or generate 14.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Globus Medical
Performance |
| Timeline |
| Microsoft |
| Globus Medical |
Microsoft and Globus Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Globus Medical
The main advantage of trading using opposite Microsoft and Globus Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |