Correlation Between Boston Scientific and ResMed
Can any of the company-specific risk be diversified away by investing in both Boston Scientific and ResMed 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 ResMed 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 ResMed Inc, you can compare the effects of market volatilities on Boston Scientific and ResMed 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 ResMed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Scientific and ResMed.
Diversification Opportunities for Boston Scientific and ResMed
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Boston and ResMed is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Boston Scientific Corp and ResMed Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ResMed Inc 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 ResMed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ResMed Inc has no effect on the direction of Boston Scientific i.e., Boston Scientific and ResMed go up and down completely randomly.
Pair Corralation between Boston Scientific and ResMed
Considering the 90-day investment horizon Boston Scientific Corp is expected to generate 0.47 times more return on investment than ResMed. However, Boston Scientific Corp is 2.14 times less risky than ResMed. It trades about 0.17 of its potential returns per unit of risk. ResMed Inc is currently generating about 0.02 per unit of risk. If you would invest 6,074 in Boston Scientific Corp on January 20, 2024 and sell it today you would earn a total of 668.00 from holding Boston Scientific Corp or generate 11.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Boston Scientific Corp vs. ResMed Inc
Performance |
Timeline |
Boston Scientific Corp |
ResMed Inc |
Boston Scientific and ResMed Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Boston Scientific and ResMed
The main advantage of trading using opposite Boston Scientific and ResMed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Scientific position performs unexpectedly, ResMed 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 ResMed will offset losses from the drop in ResMed's long position.Boston Scientific vs. Agilent Technologies | Boston Scientific vs. Illumina | Boston Scientific vs. Waters | Boston Scientific vs. Thermo Fisher Scientific |
ResMed vs. Agilent Technologies | ResMed vs. Illumina | ResMed vs. Waters | ResMed vs. Thermo Fisher Scientific |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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