Correlation Between Boston Scientific and Hyperfine

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

Diversification Opportunities for Boston Scientific and Hyperfine

-0.45

Correlation Coefficient

Boston Scientific  Hyperfine

Very good diversification

The 3 months correlation between Boston and Hyperfine is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Boston Scientific Corp and Hyperfine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyperfine 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 Hyperfine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyperfine has no effect on the direction of Boston Scientific i.e., Boston Scientific and Hyperfine go up and down completely randomly.

Pair Corralation between Boston Scientific and Hyperfine

Considering the 90-day investment horizon Boston Scientific Corp is expected to generate 0.4 times more return on investment than Hyperfine. However, Boston Scientific Corp is 2.48 times less risky than Hyperfine. It trades about 0.17 of its potential returns per unit of risk. Hyperfine is currently generating about -0.04 per unit of risk. If you would invest  8,380  in Boston Scientific Corp on August 31, 2024 and sell it today you would earn a total of  695.00  from holding Boston Scientific Corp or generate 8.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.78%
Values	Daily Returns

Boston Scientific Corp  vs.  Hyperfine

Boston Scientific Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Scientific Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Boston Scientific may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Hyperfine

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hyperfine has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Hyperfine is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Boston Scientific and Hyperfine

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

The idea behind Boston Scientific Corp and Hyperfine 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.