Correlation Between Preferred Bank and Hologic

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

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

Diversification Opportunities for Preferred Bank and Hologic

0.23

Correlation Coefficient

Preferred Bank  Hologic

Modest diversification

The 3 months correlation between Preferred and Hologic is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Preferred Bank and Hologic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hologic and Preferred Bank 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 Preferred Bank 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 Preferred Bank i.e., Preferred Bank and Hologic go up and down completely randomly.

Pair Corralation between Preferred Bank and Hologic

Assuming the 90 days horizon Preferred Bank is expected to generate 0.63 times more return on investment than Hologic. However, Preferred Bank is 1.58 times less risky than Hologic. It trades about 0.1 of its potential returns per unit of risk. Hologic is currently generating about 0.05 per unit of risk. If you would invest  7,438  in Preferred Bank on April 24, 2025 and sell it today you would earn a total of  812.00  from holding Preferred Bank or generate 10.92% return on investment over 90 days.

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

Preferred Bank  vs.  Hologic

Preferred Bank

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Preferred Bank are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Preferred Bank may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Hologic

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hologic are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hologic may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Preferred Bank and Hologic

The main advantage of trading using opposite Preferred Bank and Hologic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Preferred Bank 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 Preferred Bank 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..