Correlation Between Boston Scientific and Inspire Medical
Can any of the company-specific risk be diversified away by investing in both Boston Scientific and Inspire Medical 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 Inspire Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Scientific and Inspire Medical Systems, you can compare the effects of market volatilities on Boston Scientific and Inspire Medical 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 Inspire Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Scientific and Inspire Medical.
Diversification Opportunities for Boston Scientific and Inspire Medical
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Boston and Inspire is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Boston Scientific and Inspire Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inspire Medical Systems 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 are associated (or correlated) with Inspire Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inspire Medical Systems has no effect on the direction of Boston Scientific i.e., Boston Scientific and Inspire Medical go up and down completely randomly.
Pair Corralation between Boston Scientific and Inspire Medical
Assuming the 90 days horizon Boston Scientific is expected to generate 0.62 times more return on investment than Inspire Medical. However, Boston Scientific is 1.62 times less risky than Inspire Medical. It trades about 0.3 of its potential returns per unit of risk. Inspire Medical Systems is currently generating about -0.02 per unit of risk. If you would invest 8,650 in Boston Scientific on October 25, 2024 and sell it today you would earn a total of 1,000.00 from holding Boston Scientific or generate 11.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Scientific vs. Inspire Medical Systems
Performance |
| Timeline |
| Boston Scientific |
| Inspire Medical Systems |
Boston Scientific and Inspire Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Scientific and Inspire Medical
The main advantage of trading using opposite Boston Scientific and Inspire Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Scientific position performs unexpectedly, Inspire Medical 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 Inspire Medical will offset losses from the drop in Inspire Medical's long position.| Boston Scientific vs. Abbott Laboratories | Boston Scientific vs. Medtronic PLC | Boston Scientific vs. Stryker | Boston Scientific vs. Becton Dickinson and |
| Inspire Medical vs. Lamar Advertising | Inspire Medical vs. GungHo Online Entertainment | Inspire Medical vs. Darden Restaurants | Inspire Medical vs. YATRA ONLINE DL 0001 |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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