Correlation Between International Business and Hologic

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

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

Diversification Opportunities for International Business and Hologic

0.0

Correlation Coefficient

International Business  Hologic

Pay attention - limited upside

The 3 months correlation between International and Hologic is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and Hologic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hologic and International Business 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 International Business Machines are associated (or correlated) with Hologic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hologic has no effect on the direction of International Business i.e., International Business and Hologic go up and down completely randomly.

Pair Corralation between International Business and Hologic

If you would invest (100.00) in Hologic on October 4, 2024 and sell it today you would earn a total of  100.00  from holding Hologic or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

International Business Machine  vs.  Hologic

International Business

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Business Machines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, International Business is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

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. Despite somewhat strong basic indicators, Hologic is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with International Business and Hologic

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

The idea behind International Business Machines and Hologic 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.