Correlation Between Globus Medical and Dynatronics

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

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

Diversification Opportunities for Globus Medical and Dynatronics

0.35

Correlation Coefficient

Globus Medical  Dynatronics

Weak diversification

The 3 months correlation between Globus and Dynatronics is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Globus Medical and Dynatronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynatronics 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 Dynatronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynatronics has no effect on the direction of Globus Medical i.e., Globus Medical and Dynatronics go up and down completely randomly.

Pair Corralation between Globus Medical and Dynatronics

Given the investment horizon of 90 days Globus Medical is expected to generate 0.41 times more return on investment than Dynatronics. However, Globus Medical is 2.43 times less risky than Dynatronics. It trades about -0.05 of its potential returns per unit of risk. Dynatronics is currently generating about -0.09 per unit of risk. If you would invest  7,450  in Globus Medical on January 17, 2024 and sell it today you would lose (2,271) from holding Globus Medical or give up 30.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.68%
Values	Daily Returns

Globus Medical  vs.  Dynatronics

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 rather sound technical and fundamental indicators, Globus Medical is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Dynatronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dynatronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Globus Medical and Dynatronics

The main advantage of trading using opposite Globus Medical and Dynatronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globus Medical position performs unexpectedly, Dynatronics 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 Dynatronics will offset losses from the drop in Dynatronics' long position.

The idea behind Globus Medical and Dynatronics 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 CEOs Directory module to screen CEOs from public companies around the world.