Correlation Between Boston Scientific and Bioelectronics Corp

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

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

Diversification Opportunities for Boston Scientific and Bioelectronics Corp

0.05

Correlation Coefficient

Boston Scientific  Bioelectronics Corp

Significant diversification

The 3 months correlation between Boston and Bioelectronics is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Boston Scientific Corp and Bioelectronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bioelectronics Corp and Boston Scientific 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 Boston Scientific Corp are associated (or correlated) with Bioelectronics Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bioelectronics Corp has no effect on the direction of Boston Scientific i.e., Boston Scientific and Bioelectronics Corp go up and down completely randomly.

Pair Corralation between Boston Scientific and Bioelectronics Corp

Considering the 90-day investment horizon Boston Scientific is expected to generate 4.55 times less return on investment than Bioelectronics Corp. But when comparing it to its historical volatility, Boston Scientific Corp is 11.29 times less risky than Bioelectronics Corp. It trades about 0.15 of its potential returns per unit of risk. Bioelectronics Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  0.03  in Bioelectronics Corp on September 16, 2024 and sell it today you would earn a total of  0.00  from holding Bioelectronics Corp or generate 0.0% return on investment over 90 days.

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

Boston Scientific Corp  vs.  Bioelectronics Corp

Boston Scientific Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Scientific Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Boston Scientific may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Bioelectronics Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bioelectronics Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain technical and fundamental indicators, Bioelectronics Corp disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boston Scientific and Bioelectronics Corp

The main advantage of trading using opposite Boston Scientific and Bioelectronics Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Scientific position performs unexpectedly, Bioelectronics Corp 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 Bioelectronics Corp will offset losses from the drop in Bioelectronics Corp's long position.

The idea behind Boston Scientific Corp and Bioelectronics Corp 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.