Correlation Between Globus Medical and Home Depot
Can any of the company-specific risk be diversified away by investing in both Globus Medical and Home Depot 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 Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globus Medical and Home Depot, you can compare the effects of market volatilities on Globus Medical and Home Depot 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 Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globus Medical and Home Depot.
Diversification Opportunities for Globus Medical and Home Depot
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Globus and Home is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Globus Medical and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot 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 Home Depot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Depot has no effect on the direction of Globus Medical i.e., Globus Medical and Home Depot go up and down completely randomly.
Pair Corralation between Globus Medical and Home Depot
Given the investment horizon of 90 days Globus Medical is expected to generate 1.12 times more return on investment than Home Depot. However, Globus Medical is 1.12 times more volatile than Home Depot. It trades about 0.01 of its potential returns per unit of risk. Home Depot is currently generating about -0.45 per unit of risk. If you would invest 5,115 in Globus Medical on January 25, 2024 and sell it today you would earn a total of 12.00 from holding Globus Medical or generate 0.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Globus Medical vs. Home Depot
Performance |
| Timeline |
| Globus Medical |
| Home Depot |
Globus Medical and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globus Medical and Home Depot
The main advantage of trading using opposite Globus Medical and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globus Medical position performs unexpectedly, Home Depot 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 Home Depot will offset losses from the drop in Home Depot's long position.| Globus Medical vs. HealthStream | Globus Medical vs. National Research Corp | Globus Medical vs. HealthEquity | Globus Medical vs. Health Catalyst |
| Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Kirklands | Home Depot vs. Live Ventures |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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