Correlation Between Intuitive Surgical and Hologic

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

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

Diversification Opportunities for Intuitive Surgical and Hologic

-0.05

Correlation Coefficient

Intuitive Surgical  Hologic

Good diversification

The 3 months correlation between Intuitive and Hologic is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Intuitive Surgical and Hologic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hologic and Intuitive Surgical 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 Intuitive Surgical 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 Intuitive Surgical i.e., Intuitive Surgical and Hologic go up and down completely randomly.

Pair Corralation between Intuitive Surgical and Hologic

Assuming the 90 days trading horizon Intuitive Surgical is expected to generate 1.47 times more return on investment than Hologic. However, Intuitive Surgical is 1.47 times more volatile than Hologic. It trades about 0.1 of its potential returns per unit of risk. Hologic is currently generating about 0.01 per unit of risk. If you would invest  41,400  in Intuitive Surgical on September 27, 2024 and sell it today you would earn a total of  9,130  from holding Intuitive Surgical or generate 22.05% return on investment over 90 days.

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

Intuitive Surgical  vs.  Hologic

Intuitive Surgical

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Intuitive Surgical are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Intuitive Surgical reported solid returns over the last few months and may actually be approaching a breakup point.

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 nearly stable basic indicators, Hologic is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Intuitive Surgical and Hologic

The main advantage of trading using opposite Intuitive Surgical and Hologic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intuitive Surgical 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 Intuitive Surgical 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.