Correlation Between Boston Scientific and Encision

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

Diversification Opportunities for Boston Scientific and Encision

0.23
  Correlation Coefficient

Modest diversification

The 3 months correlation between Boston and Encision is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Boston Scientific Corp and Encision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Encision 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 Encision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Encision has no effect on the direction of Boston Scientific i.e., Boston Scientific and Encision go up and down completely randomly.

Pair Corralation between Boston Scientific and Encision

Considering the 90-day investment horizon Boston Scientific Corp is expected to generate 0.26 times more return on investment than Encision. However, Boston Scientific Corp is 3.77 times less risky than Encision. It trades about 0.07 of its potential returns per unit of risk. Encision is currently generating about -0.01 per unit of risk. If you would invest  4,484  in Boston Scientific Corp on December 29, 2023 and sell it today you would earn a total of  2,378  from holding Boston Scientific Corp or generate 53.03% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy93.72%
ValuesDaily Returns

Boston Scientific Corp  vs.  Encision

 Performance 
       Timeline  
Boston Scientific Corp 

Risk-Adjusted Performance

22 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Boston Scientific Corp are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Boston Scientific showed solid returns over the last few months and may actually be approaching a breakup point.
Encision 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
OK
Over the last 90 days Encision has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak forward indicators, Encision sustained solid returns over the last few months and may actually be approaching a breakup point.

Boston Scientific and Encision Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Boston Scientific and Encision

The main advantage of trading using opposite Boston Scientific and Encision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Scientific position performs unexpectedly, Encision 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 Encision will offset losses from the drop in Encision's long position.
The idea behind Boston Scientific Corp and Encision 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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