Correlation Between Boston Scientific and Align Technology
Can any of the company-specific risk be diversified away by investing in both Boston Scientific and Align Technology 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 Align Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Scientific and Align Technology, you can compare the effects of market volatilities on Boston Scientific and Align Technology 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 Align Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Scientific and Align Technology.
Diversification Opportunities for Boston Scientific and Align Technology
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Boston and Align is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Boston Scientific and Align Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Align Technology 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 Align Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Align Technology has no effect on the direction of Boston Scientific i.e., Boston Scientific and Align Technology go up and down completely randomly.
Pair Corralation between Boston Scientific and Align Technology
Assuming the 90 days horizon Boston Scientific is expected to generate 0.81 times more return on investment than Align Technology. However, Boston Scientific is 1.23 times less risky than Align Technology. It trades about 0.25 of its potential returns per unit of risk. Align Technology is currently generating about 0.19 per unit of risk. 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Scientific vs. Align Technology
Performance |
| Timeline |
| Boston Scientific |
| Align Technology |
Boston Scientific and Align Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Scientific and Align Technology
The main advantage of trading using opposite Boston Scientific and Align Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Scientific position performs unexpectedly, Align Technology 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 Align Technology will offset losses from the drop in Align Technology's long position.| Boston Scientific vs. Abbott Laboratories | Boston Scientific vs. Medtronic PLC | Boston Scientific vs. Stryker | Boston Scientific vs. Becton Dickinson and |
| Align Technology vs. Superior Plus Corp | Align Technology vs. NMI Holdings | Align Technology vs. Origin Agritech | Align Technology vs. SIVERS SEMICONDUCTORS AB |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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