Correlation Between Boston Scientific and Insulet

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

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

Diversification Opportunities for Boston Scientific and Insulet

0.75

Correlation Coefficient

Boston Scientific  Insulet

Poor diversification

The 3 months correlation between Boston and Insulet is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Boston Scientific and Insulet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insulet 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 Insulet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insulet has no effect on the direction of Boston Scientific i.e., Boston Scientific and Insulet go up and down completely randomly.

Pair Corralation between Boston Scientific and Insulet

Assuming the 90 days horizon Boston Scientific is expected to generate 1.05 times more return on investment than Insulet. However, Boston Scientific is 1.05 times more volatile than Insulet. It trades about 0.06 of its potential returns per unit of risk. Insulet is currently generating about -0.03 per unit of risk. If you would invest  8,600  in Boston Scientific on December 30, 2024 and sell it today you would earn a total of  650.00  from holding Boston Scientific or generate 7.56% return on investment over 90 days.

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

Boston Scientific  vs.  Insulet

Boston Scientific

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Scientific are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Boston Scientific may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Insulet

Risk-Adjusted Performance

Very Weak

Over the last 90 days Insulet has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Insulet is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Boston Scientific and Insulet

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

The idea behind Boston Scientific and Insulet 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.