Correlation Between Treace Medical and Hologic

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

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

Diversification Opportunities for Treace Medical and Hologic

-0.52

Correlation Coefficient

Treace Medical  Hologic

Excellent diversification

The 3 months correlation between Treace and Hologic is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Treace Medical Concepts and Hologic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hologic and Treace 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 Treace Medical Concepts 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 Treace Medical i.e., Treace Medical and Hologic go up and down completely randomly.

Pair Corralation between Treace Medical and Hologic

Given the investment horizon of 90 days Treace Medical Concepts is expected to generate 4.83 times more return on investment than Hologic. However, Treace Medical is 4.83 times more volatile than Hologic. It trades about 0.01 of its potential returns per unit of risk. Hologic is currently generating about -0.05 per unit of risk. If you would invest  1,282  in Treace Medical Concepts on December 4, 2024 and sell it today you would lose (406.00) from holding Treace Medical Concepts or give up 31.67% of portfolio value over 90 days.

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

Treace Medical Concepts  vs.  Hologic

Treace Medical Concepts

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Treace Medical Concepts are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain fundamental indicators, Treace Medical demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Hologic

Risk-Adjusted Performance

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 unsteady performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Treace Medical and Hologic

The main advantage of trading using opposite Treace Medical and Hologic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Treace Medical 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 Treace Medical Concepts 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.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.