Correlation Between Medtronic PLC and Boston Scientific
Can any of the company-specific risk be diversified away by investing in both Medtronic PLC 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 Medtronic PLC and Boston Scientific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medtronic PLC and Boston Scientific, you can compare the effects of market volatilities on Medtronic PLC 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 Medtronic PLC with a short position of Boston Scientific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medtronic PLC and Boston Scientific.
Diversification Opportunities for Medtronic PLC and Boston Scientific
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Medtronic and Boston is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Medtronic PLC and Boston Scientific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Scientific and Medtronic PLC 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 Medtronic PLC 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 Medtronic PLC i.e., Medtronic PLC and Boston Scientific go up and down completely randomly.
Pair Corralation between Medtronic PLC and Boston Scientific
Assuming the 90 days horizon Medtronic PLC is expected to under-perform the Boston Scientific. But the stock apears to be less risky and, when comparing its historical volatility, Medtronic PLC is 1.13 times less risky than Boston Scientific. The stock trades about -0.08 of its potential returns per unit of risk. The Boston Scientific is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 7,800 in Boston Scientific on August 29, 2024 and sell it today you would earn a total of 650.00 from holding Boston Scientific or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Medtronic PLC vs. Boston Scientific
Performance |
| Timeline |
| Medtronic PLC |
| Boston Scientific |
Medtronic PLC and Boston Scientific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medtronic PLC and Boston Scientific
The main advantage of trading using opposite Medtronic PLC and Boston Scientific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medtronic PLC 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.| Medtronic PLC vs. Superior Plus Corp | Medtronic PLC vs. NMI Holdings | Medtronic PLC vs. Origin Agritech | Medtronic PLC vs. SIVERS SEMICONDUCTORS AB |
| Boston Scientific vs. Abbott Laboratories | Boston Scientific vs. Medtronic PLC | Boston Scientific vs. Stryker | Boston Scientific vs. Becton Dickinson and |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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