Correlation Between Globus Medical and PIMCO 1

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Can any of the company-specific risk be diversified away by investing in both Globus Medical and PIMCO 1 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 PIMCO 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globus Medical and PIMCO 1 5 Year, you can compare the effects of market volatilities on Globus Medical and PIMCO 1 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 PIMCO 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globus Medical and PIMCO 1.

Diversification Opportunities for Globus Medical and PIMCO 1

-0.06
  Correlation Coefficient

Good diversification

The 3 months correlation between Globus and PIMCO is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Globus Medical and PIMCO 1-5 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO 1-5 Year 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 PIMCO 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO 1-5 Year has no effect on the direction of Globus Medical i.e., Globus Medical and PIMCO 1 go up and down completely randomly.

Pair Corralation between Globus Medical and PIMCO 1

Given the investment horizon of 90 days Globus Medical is expected to under-perform the PIMCO 1. In addition to that, Globus Medical is 16.3 times more volatile than PIMCO 1 5 Year. It trades about -0.13 of its total potential returns per unit of risk. PIMCO 1 5 Year is currently generating about 0.34 per unit of volatility. If you would invest  5,107  in PIMCO 1 5 Year on December 29, 2023 and sell it today you would earn a total of  46.00  from holding PIMCO 1 5 Year or generate 0.9% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Globus Medical  vs.  PIMCO 1-5 Year

 Performance 
       Timeline  
Globus Medical 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Globus Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Globus Medical is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.
PIMCO 1-5 Year 

Risk-Adjusted Performance

6 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO 1 5 Year are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, PIMCO 1 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Globus Medical and PIMCO 1 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Globus Medical and PIMCO 1

The main advantage of trading using opposite Globus Medical and PIMCO 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globus Medical position performs unexpectedly, PIMCO 1 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 PIMCO 1 will offset losses from the drop in PIMCO 1's long position.
The idea behind Globus Medical and PIMCO 1 5 Year 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.
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.

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