Correlation Between Boston Scientific and Spine Injury

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

Diversification Opportunities for Boston Scientific and Spine Injury

0.86

Correlation Coefficient

Boston Scientific  Spine Injury

Very poor diversification

The 3 months correlation between Boston and Spine is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Boston Scientific Corp and Spine Injury Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spine Injury Solutions 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 Spine Injury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spine Injury Solutions has no effect on the direction of Boston Scientific i.e., Boston Scientific and Spine Injury go up and down completely randomly.

Pair Corralation between Boston Scientific and Spine Injury

Considering the 90-day investment horizon Boston Scientific Corp is expected to generate 1.23 times more return on investment than Spine Injury. However, Boston Scientific is 1.23 times more volatile than Spine Injury Solutions. It trades about 0.19 of its potential returns per unit of risk. Spine Injury Solutions is currently generating about -0.09 per unit of risk. If you would invest  8,872  in Boston Scientific Corp on October 10, 2024 and sell it today you would earn a total of  327.00  from holding Boston Scientific Corp or generate 3.69% return on investment over 90 days.

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

Boston Scientific Corp  vs.  Spine Injury Solutions

Boston Scientific Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Scientific Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Boston Scientific may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Spine Injury Solutions

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Spine Injury Solutions are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Spine Injury is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Boston Scientific and Spine Injury

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

The idea behind Boston Scientific Corp and Spine Injury Solutions 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.