Correlation Between GEAR4MUSIC and Hologic

Can any of the company-specific risk be diversified away by investing in both GEAR4MUSIC 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 GEAR4MUSIC and Hologic into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GEAR4MUSIC LS 10 and Hologic, you can compare the effects of market volatilities on GEAR4MUSIC 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 GEAR4MUSIC with a short position of Hologic. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEAR4MUSIC and Hologic.

Diversification Opportunities for GEAR4MUSIC and Hologic

-0.14

Correlation Coefficient

GEAR4MUSIC  Hologic

Good diversification

The 3 months correlation between GEAR4MUSIC and Hologic is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding GEAR4MUSIC LS 10 and Hologic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hologic and GEAR4MUSIC 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 GEAR4MUSIC LS 10 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 GEAR4MUSIC i.e., GEAR4MUSIC and Hologic go up and down completely randomly.

Pair Corralation between GEAR4MUSIC and Hologic

Assuming the 90 days horizon GEAR4MUSIC LS 10 is expected to generate 1.98 times more return on investment than Hologic. However, GEAR4MUSIC is 1.98 times more volatile than Hologic. It trades about 0.0 of its potential returns per unit of risk. Hologic is currently generating about -0.03 per unit of risk. If you would invest  197.00  in GEAR4MUSIC LS 10 on September 25, 2024 and sell it today you would lose (3.00) from holding GEAR4MUSIC LS 10 or give up 1.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

GEAR4MUSIC LS 10  vs.  Hologic

GEAR4MUSIC LS 10

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GEAR4MUSIC LS 10 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, GEAR4MUSIC is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

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 GEAR4MUSIC and Hologic

The main advantage of trading using opposite GEAR4MUSIC and Hologic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEAR4MUSIC 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 GEAR4MUSIC LS 10 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..