Correlation Between GP Investments and Boston Scientific

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

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

Diversification Opportunities for GP Investments and Boston Scientific

-0.43

Correlation Coefficient

GP Investments  Boston Scientific

Very good diversification

The 3 months correlation between GPIV33 and Boston is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding GP Investments and Boston Scientific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Scientific and GP Investments 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 GP Investments are associated (or correlated) with Boston Scientific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Scientific has no effect on the direction of GP Investments i.e., GP Investments and Boston Scientific go up and down completely randomly.

Pair Corralation between GP Investments and Boston Scientific

Assuming the 90 days trading horizon GP Investments is expected to generate 2.08 times less return on investment than Boston Scientific. In addition to that, GP Investments is 2.63 times more volatile than Boston Scientific. It trades about 0.04 of its total potential returns per unit of risk. Boston Scientific is currently generating about 0.24 per unit of volatility. If you would invest  26,919  in Boston Scientific on October 3, 2024 and sell it today you would earn a total of  28,745  from holding Boston Scientific or generate 106.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.63%
Values	Daily Returns

GP Investments  vs.  Boston Scientific

GP Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GP Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Boston Scientific

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Scientific are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Boston Scientific sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GP Investments and Boston Scientific

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

The idea behind GP Investments and Boston Scientific 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.