Correlation Between Boston Scientific and Ryanair Holdings

Can any of the company-specific risk be diversified away by investing in both Boston Scientific and Ryanair Holdings 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 Ryanair Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Boston Scientific and Ryanair Holdings plc, you can compare the effects of market volatilities on Boston Scientific and Ryanair Holdings 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 Ryanair Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Scientific and Ryanair Holdings.

Diversification Opportunities for Boston Scientific and Ryanair Holdings

0.57

Correlation Coefficient

Boston Scientific  Ryanair Holdings

Very weak diversification

The 3 months correlation between Boston and Ryanair is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Boston Scientific and Ryanair Holdings plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ryanair Holdings plc 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 are associated (or correlated) with Ryanair Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ryanair Holdings plc has no effect on the direction of Boston Scientific i.e., Boston Scientific and Ryanair Holdings go up and down completely randomly.

Pair Corralation between Boston Scientific and Ryanair Holdings

Assuming the 90 days trading horizon Boston Scientific is expected to generate 1.63 times more return on investment than Ryanair Holdings. However, Boston Scientific is 1.63 times more volatile than Ryanair Holdings plc. It trades about 0.12 of its potential returns per unit of risk. Ryanair Holdings plc is currently generating about -0.25 per unit of risk. If you would invest  54,505  in Boston Scientific on October 6, 2024 and sell it today you would earn a total of  1,468  from holding Boston Scientific or generate 2.69% return on investment over 90 days.

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

Boston Scientific  vs.  Ryanair Holdings plc

Boston Scientific

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Scientific are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Boston Scientific sustained solid returns over the last few months and may actually be approaching a breakup point.

Ryanair Holdings plc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ryanair Holdings plc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ryanair Holdings sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boston Scientific and Ryanair Holdings

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

The idea behind Boston Scientific and Ryanair Holdings plc 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.