Correlation Between Boston Scientific and Brainsway

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

Diversification Opportunities for Boston Scientific and Brainsway

-0.47

Correlation Coefficient

Boston Scientific  Brainsway

Very good diversification

The 3 months correlation between Boston and Brainsway is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Boston Scientific Corp and Brainsway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brainsway 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 Brainsway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brainsway has no effect on the direction of Boston Scientific i.e., Boston Scientific and Brainsway go up and down completely randomly.

Pair Corralation between Boston Scientific and Brainsway

Considering the 90-day investment horizon Boston Scientific Corp is expected to generate 0.36 times more return on investment than Brainsway. However, Boston Scientific Corp is 2.81 times less risky than Brainsway. It trades about 0.17 of its potential returns per unit of risk. Brainsway is currently generating about -0.07 per unit of risk. If you would invest  6,622  in Boston Scientific Corp on February 19, 2024 and sell it today you would earn a total of  843.00  from holding Boston Scientific Corp or generate 12.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Boston Scientific Corp  vs.  Brainsway

Boston Scientific Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Scientific Corp are ranked lower than 13 (%) 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 June 2024.

Brainsway

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brainsway has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Boston Scientific and Brainsway

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

The idea behind Boston Scientific Corp and Brainsway 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.