Correlation Between Boston Scientific and TruBridge

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

Diversification Opportunities for Boston Scientific and TruBridge

0.92

Correlation Coefficient

Boston Scientific  TruBridge

Almost no diversification

The 3 months correlation between Boston and TruBridge is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Boston Scientific Corp and TruBridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TruBridge 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 TruBridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TruBridge has no effect on the direction of Boston Scientific i.e., Boston Scientific and TruBridge go up and down completely randomly.

Pair Corralation between Boston Scientific and TruBridge

Considering the 90-day investment horizon Boston Scientific is expected to generate 3.44 times less return on investment than TruBridge. But when comparing it to its historical volatility, Boston Scientific Corp is 1.8 times less risky than TruBridge. It trades about 0.2 of its potential returns per unit of risk. TruBridge is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest  1,810  in TruBridge on December 2, 2024 and sell it today you would earn a total of  1,095  from holding TruBridge or generate 60.5% return on investment over 90 days.

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

Boston Scientific Corp  vs.  TruBridge

Boston Scientific Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Scientific Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Boston Scientific showed solid returns over the last few months and may actually be approaching a breakup point.

TruBridge

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in TruBridge are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, TruBridge reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boston Scientific and TruBridge

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

The idea behind Boston Scientific Corp and TruBridge 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.