Correlation Between Boston Scientific and Integra LifeSciences

Can any of the company-specific risk be diversified away by investing in both Boston Scientific and Integra 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 Boston Scientific and Integra LifeSciences 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 Integra LifeSciences Holdings, you can compare the effects of market volatilities on Boston Scientific and Integra 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 Boston Scientific with a short position of Integra LifeSciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Scientific and Integra LifeSciences.

Diversification Opportunities for Boston Scientific and Integra LifeSciences

0.77

Correlation Coefficient

Boston Scientific  Integra LifeSciences

Poor diversification

The 3 months correlation between Boston and Integra is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Boston Scientific Corp and Integra LifeSciences Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integra LifeSciences 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 Integra LifeSciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integra LifeSciences has no effect on the direction of Boston Scientific i.e., Boston Scientific and Integra LifeSciences go up and down completely randomly.

Pair Corralation between Boston Scientific and Integra LifeSciences

Considering the 90-day investment horizon Boston Scientific is expected to generate 4.34 times less return on investment than Integra LifeSciences. But when comparing it to its historical volatility, Boston Scientific Corp is 3.85 times less risky than Integra LifeSciences. It trades about 0.09 of its potential returns per unit of risk. Integra LifeSciences Holdings is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,754  in Integra LifeSciences Holdings on September 22, 2024 and sell it today you would earn a total of  426.00  from holding Integra LifeSciences Holdings or generate 24.29% return on investment over 90 days.

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

Boston Scientific Corp  vs.  Integra LifeSciences Holdings

Boston Scientific Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Scientific Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Boston Scientific is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Integra LifeSciences

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Integra LifeSciences Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Integra LifeSciences unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boston Scientific and Integra LifeSciences

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

The idea behind Boston Scientific Corp and Integra LifeSciences Holdings 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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.