Correlation Between Boston Scientific and Dynatronics
Can any of the company-specific risk be diversified away by investing in both Boston Scientific and Dynatronics 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 Dynatronics 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 Dynatronics, you can compare the effects of market volatilities on Boston Scientific and Dynatronics 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 Dynatronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Scientific and Dynatronics.
Diversification Opportunities for Boston Scientific and Dynatronics
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Boston and Dynatronics is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Boston Scientific Corp and Dynatronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynatronics 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 Dynatronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynatronics has no effect on the direction of Boston Scientific i.e., Boston Scientific and Dynatronics go up and down completely randomly.
Pair Corralation between Boston Scientific and Dynatronics
Considering the 90-day investment horizon Boston Scientific is expected to generate 5.57 times less return on investment than Dynatronics. But when comparing it to its historical volatility, Boston Scientific Corp is 8.08 times less risky than Dynatronics. It trades about 0.24 of its potential returns per unit of risk. Dynatronics is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 44.00 in Dynatronics on January 26, 2024 and sell it today you would earn a total of 15.00 from holding Dynatronics or generate 34.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Scientific Corp vs. Dynatronics
Performance |
| Timeline |
| Boston Scientific Corp |
| Dynatronics |
Boston Scientific and Dynatronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Scientific and Dynatronics
The main advantage of trading using opposite Boston Scientific and Dynatronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Scientific position performs unexpectedly, Dynatronics 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 Dynatronics will offset losses from the drop in Dynatronics' long position.The idea behind Boston Scientific Corp and Dynatronics 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.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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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