Correlation Between Hologic and ICU Medical

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

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

Diversification Opportunities for Hologic and ICU Medical

0.16

Correlation Coefficient

Hologic  ICU Medical

Average diversification

The 3 months correlation between Hologic and ICU is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Hologic and ICU Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICU Medical and Hologic 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 Hologic are associated (or correlated) with ICU Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICU Medical has no effect on the direction of Hologic i.e., Hologic and ICU Medical go up and down completely randomly.

Pair Corralation between Hologic and ICU Medical

Given the investment horizon of 90 days Hologic is expected to under-perform the ICU Medical. But the stock apears to be less risky and, when comparing its historical volatility, Hologic is 1.39 times less risky than ICU Medical. The stock trades about -0.04 of its potential returns per unit of risk. The ICU Medical is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  16,309  in ICU Medical on September 2, 2024 and sell it today you would earn a total of  87.00  from holding ICU Medical or generate 0.53% return on investment over 90 days.

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

Hologic  vs.  ICU Medical

Hologic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hologic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Hologic is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

ICU Medical

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ICU Medical are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, ICU Medical is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Hologic and ICU Medical

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

The idea behind Hologic and ICU 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.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.