Correlation Between Boston Scientific and CryoLife
Can any of the company-specific risk be diversified away by investing in both Boston Scientific and CryoLife 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 CryoLife into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Scientific and CryoLife, you can compare the effects of market volatilities on Boston Scientific and CryoLife 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 CryoLife. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Scientific and CryoLife.
Diversification Opportunities for Boston Scientific and CryoLife
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Boston and CryoLife is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Boston Scientific and CryoLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CryoLife 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 CryoLife. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CryoLife has no effect on the direction of Boston Scientific i.e., Boston Scientific and CryoLife go up and down completely randomly.
Pair Corralation between Boston Scientific and CryoLife
Assuming the 90 days horizon Boston Scientific is expected to generate 1.31 times less return on investment than CryoLife. But when comparing it to its historical volatility, Boston Scientific is 1.07 times less risky than CryoLife. It trades about 0.14 of its potential returns per unit of risk. CryoLife is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 2,260 in CryoLife on September 25, 2024 and sell it today you would earn a total of 455.00 from holding CryoLife or generate 20.13% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Boston Scientific vs. CryoLife
Performance |
Timeline |
Boston Scientific |
CryoLife |
Boston Scientific and CryoLife Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Boston Scientific and CryoLife
The main advantage of trading using opposite Boston Scientific and CryoLife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Scientific position performs unexpectedly, CryoLife 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 CryoLife will offset losses from the drop in CryoLife's long position.Boston Scientific vs. Abbott Laboratories | Boston Scientific vs. Medtronic PLC | Boston Scientific vs. Stryker | Boston Scientific vs. Siemens Healthineers AG |
CryoLife vs. Abbott Laboratories | CryoLife vs. Medtronic PLC | CryoLife vs. Stryker | CryoLife vs. Boston 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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