Correlation Between Hologic and Edwards Lifesciences
Can any of the company-specific risk be diversified away by investing in both Hologic and Edwards Lifesciences 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 Edwards Lifesciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hologic and Edwards Lifesciences Corp, you can compare the effects of market volatilities on Hologic and Edwards Lifesciences 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 Edwards Lifesciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hologic and Edwards Lifesciences.
Diversification Opportunities for Hologic and Edwards Lifesciences
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hologic and Edwards is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Hologic and Edwards Lifesciences Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edwards Lifesciences Corp 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 Edwards Lifesciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edwards Lifesciences Corp has no effect on the direction of Hologic i.e., Hologic and Edwards Lifesciences go up and down completely randomly.
Pair Corralation between Hologic and Edwards Lifesciences
Given the investment horizon of 90 days Hologic is expected to generate 0.86 times more return on investment than Edwards Lifesciences. However, Hologic is 1.17 times less risky than Edwards Lifesciences. It trades about 0.08 of its potential returns per unit of risk. Edwards Lifesciences Corp is currently generating about -0.16 per unit of risk. If you would invest 7,635 in Hologic on January 16, 2024 and sell it today you would earn a total of 119.00 from holding Hologic or generate 1.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hologic vs. Edwards Lifesciences Corp
Performance |
| Timeline |
| Hologic |
| Edwards Lifesciences Corp |
Hologic and Edwards Lifesciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hologic and Edwards Lifesciences
The main advantage of trading using opposite Hologic and Edwards Lifesciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hologic position performs unexpectedly, Edwards Lifesciences 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 Edwards Lifesciences will offset losses from the drop in Edwards Lifesciences' long position.| Hologic vs. The Ensign Group | Hologic vs. Select Medical Holdings | Hologic vs. Encompass Health Corp | Hologic vs. Enhabit |
| Edwards Lifesciences vs. The Ensign Group | Edwards Lifesciences vs. Select Medical Holdings | Edwards Lifesciences vs. Encompass Health Corp | Edwards Lifesciences vs. Enhabit |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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