Correlation Between Accuray Incorporated and Globus Medical

Can any of the company-specific risk be diversified away by investing in both Accuray Incorporated 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 Accuray Incorporated and Globus Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Accuray Incorporated and Globus Medical, you can compare the effects of market volatilities on Accuray Incorporated 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 Accuray Incorporated with a short position of Globus Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Accuray Incorporated and Globus Medical.

Diversification Opportunities for Accuray Incorporated and Globus Medical

0.69

Correlation Coefficient

Accuray Incorporated  Globus Medical

Poor diversification

The 3 months correlation between Accuray and Globus is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Accuray Incorporated and Globus Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globus Medical and Accuray Incorporated 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 Accuray Incorporated 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 Accuray Incorporated i.e., Accuray Incorporated and Globus Medical go up and down completely randomly.

Pair Corralation between Accuray Incorporated and Globus Medical

Given the investment horizon of 90 days Accuray Incorporated is expected to under-perform the Globus Medical. In addition to that, Accuray Incorporated is 1.15 times more volatile than Globus Medical. It trades about -0.29 of its total potential returns per unit of risk. Globus Medical is currently generating about -0.17 per unit of volatility. If you would invest  5,313  in Globus Medical on January 29, 2024 and sell it today you would lose (258.00) from holding Globus Medical or give up 4.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Accuray Incorporated  vs.  Globus Medical

Accuray Incorporated

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Accuray Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Globus Medical

Risk-Adjusted Performance

0 of 100

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 latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Accuray Incorporated and Globus Medical

The main advantage of trading using opposite Accuray Incorporated and Globus Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Accuray Incorporated 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.

The idea behind Accuray Incorporated and Globus Medical 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.