Correlation Between Supermarket Income and Boston Scientific

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

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

Diversification Opportunities for Supermarket Income and Boston Scientific

-0.64

Correlation Coefficient

Supermarket Income  Boston Scientific

Excellent diversification

The 3 months correlation between Supermarket and Boston is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Supermarket Income REIT and Boston Scientific Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Scientific Corp and Supermarket Income 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 Supermarket Income REIT 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 Corp has no effect on the direction of Supermarket Income i.e., Supermarket Income and Boston Scientific go up and down completely randomly.

Pair Corralation between Supermarket Income and Boston Scientific

Assuming the 90 days trading horizon Supermarket Income REIT is expected to under-perform the Boston Scientific. But the stock apears to be less risky and, when comparing its historical volatility, Supermarket Income REIT is 1.01 times less risky than Boston Scientific. The stock trades about -0.02 of its potential returns per unit of risk. The Boston Scientific Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  7,732  in Boston Scientific Corp on September 24, 2024 and sell it today you would earn a total of  1,185  from holding Boston Scientific Corp or generate 15.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.22%
Values	Daily Returns

Supermarket Income REIT  vs.  Boston Scientific Corp

Supermarket Income REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Supermarket Income REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Boston Scientific Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Scientific Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Boston Scientific may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Supermarket Income and Boston Scientific

The main advantage of trading using opposite Supermarket Income and Boston Scientific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Supermarket Income 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 Supermarket Income REIT and Boston Scientific Corp 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.