Correlation Between Tandem Diabetes and Boston Scientific

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

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

Diversification Opportunities for Tandem Diabetes and Boston Scientific

-0.18

Correlation Coefficient

Tandem Diabetes  Boston Scientific

Good diversification

The 3 months correlation between Tandem and Boston is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Tandem Diabetes Care 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 Tandem Diabetes 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 Tandem Diabetes Care 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 Tandem Diabetes i.e., Tandem Diabetes and Boston Scientific go up and down completely randomly.

Pair Corralation between Tandem Diabetes and Boston Scientific

Given the investment horizon of 90 days Tandem Diabetes Care is expected to under-perform the Boston Scientific. In addition to that, Tandem Diabetes is 3.53 times more volatile than Boston Scientific Corp. It trades about -0.17 of its total potential returns per unit of risk. Boston Scientific Corp is currently generating about 0.12 per unit of volatility. If you would invest  8,968  in Boston Scientific Corp on December 28, 2024 and sell it today you would earn a total of  968.00  from holding Boston Scientific Corp or generate 10.79% return on investment over 90 days.

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

Tandem Diabetes Care  vs.  Boston Scientific Corp

Tandem Diabetes Care

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tandem Diabetes Care has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Boston Scientific Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Scientific Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Boston Scientific may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Tandem Diabetes and Boston Scientific

The main advantage of trading using opposite Tandem Diabetes and Boston Scientific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tandem Diabetes 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 Tandem Diabetes Care 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.