Correlation Between Boston Scientific and Synchrony Financial

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

Diversification Opportunities for Boston Scientific and Synchrony Financial

0.85

Correlation Coefficient

Boston Scientific  Synchrony Financial

Very poor diversification

The 3 months correlation between Boston and Synchrony is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Boston Scientific Corp and Synchrony Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synchrony Financial 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 Synchrony Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synchrony Financial has no effect on the direction of Boston Scientific i.e., Boston Scientific and Synchrony Financial go up and down completely randomly.

Pair Corralation between Boston Scientific and Synchrony Financial

Assuming the 90 days trading horizon Boston Scientific is expected to generate 1.07 times less return on investment than Synchrony Financial. But when comparing it to its historical volatility, Boston Scientific Corp is 1.82 times less risky than Synchrony Financial. It trades about 0.13 of its potential returns per unit of risk. Synchrony Financial is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3,269  in Synchrony Financial on October 11, 2024 and sell it today you would earn a total of  3,323  from holding Synchrony Financial or generate 101.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.81%
Values	Daily Returns

Boston Scientific Corp  vs.  Synchrony Financial

Boston Scientific Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Scientific Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Boston Scientific may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Synchrony Financial

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Synchrony Financial are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Synchrony Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boston Scientific and Synchrony Financial

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

The idea behind Boston Scientific Corp and Synchrony Financial 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.