Correlation Between Pfizer and Globus Medical
Can any of the company-specific risk be diversified away by investing in both Pfizer 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 Pfizer and Globus Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and Globus Medical, you can compare the effects of market volatilities on Pfizer 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 Pfizer with a short position of Globus Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Globus Medical.
Diversification Opportunities for Pfizer and Globus Medical
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Pfizer and Globus is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Globus Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globus Medical and Pfizer 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 Pfizer Inc 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 Pfizer i.e., Pfizer and Globus Medical go up and down completely randomly.
Pair Corralation between Pfizer and Globus Medical
Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Globus Medical. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc is 1.33 times less risky than Globus Medical. The stock trades about -0.05 of its potential returns per unit of risk. The Globus Medical is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 5,591 in Globus Medical on August 31, 2024 and sell it today you would earn a total of 2,970 from holding Globus Medical or generate 53.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pfizer Inc vs. Globus Medical
Performance |
| Timeline |
| Pfizer Inc |
| Globus Medical |
Pfizer and Globus Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and Globus Medical
The main advantage of trading using opposite Pfizer and Globus Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer 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.| Pfizer vs. Johnson Johnson | Pfizer vs. RLJ Lodging Trust | Pfizer vs. Aquagold International | Pfizer vs. Stepstone Group |
| 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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