Correlation Between Boston Scientific and Edwards Lifesciences
Can any of the company-specific risk be diversified away by investing in both Boston Scientific and Edwards Lifesciences 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 Edwards Lifesciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Scientific and Edwards Lifesciences, you can compare the effects of market volatilities on Boston Scientific and Edwards Lifesciences 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 Edwards Lifesciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Scientific and Edwards Lifesciences.
Diversification Opportunities for Boston Scientific and Edwards Lifesciences
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Boston and Edwards is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Boston Scientific and Edwards Lifesciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edwards Lifesciences 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 Edwards Lifesciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edwards Lifesciences has no effect on the direction of Boston Scientific i.e., Boston Scientific and Edwards Lifesciences go up and down completely randomly.
Pair Corralation between Boston Scientific and Edwards Lifesciences
Assuming the 90 days horizon Boston Scientific is expected to generate 1.0 times more return on investment than Edwards Lifesciences. However, Boston Scientific is 1.0 times less risky than Edwards Lifesciences. It trades about 0.24 of its potential returns per unit of risk. Edwards Lifesciences is currently generating about 0.23 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 Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Scientific vs. Edwards Lifesciences
Performance |
| Timeline |
| Boston Scientific |
| Edwards Lifesciences |
Boston Scientific and Edwards Lifesciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Scientific and Edwards Lifesciences
The main advantage of trading using opposite Boston Scientific and Edwards Lifesciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Scientific position performs unexpectedly, Edwards Lifesciences 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 Edwards Lifesciences will offset losses from the drop in Edwards Lifesciences' long position.| Boston Scientific vs. Abbott Laboratories | Boston Scientific vs. Medtronic PLC | Boston Scientific vs. Stryker | Boston Scientific vs. Becton Dickinson and |
| Edwards Lifesciences vs. QINGCI GAMES INC | Edwards Lifesciences vs. GameStop Corp | Edwards Lifesciences vs. OURGAME INTHOLDL 00005 | Edwards Lifesciences vs. Hochschild Mining plc |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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