Correlation Between Boston Scientific and Stryker
Can any of the company-specific risk be diversified away by investing in both Boston Scientific and Stryker 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 Stryker into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Scientific and Stryker, you can compare the effects of market volatilities on Boston Scientific and Stryker 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 Stryker. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Scientific and Stryker.
Diversification Opportunities for Boston Scientific and Stryker
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Boston and Stryker is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Boston Scientific and Stryker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stryker 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 Stryker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stryker has no effect on the direction of Boston Scientific i.e., Boston Scientific and Stryker go up and down completely randomly.
Pair Corralation between Boston Scientific and Stryker
Assuming the 90 days horizon Boston Scientific is expected to generate 1.14 times less return on investment than Stryker. But when comparing it to its historical volatility, Boston Scientific is 1.16 times less risky than Stryker. It trades about 0.23 of its potential returns per unit of risk. Stryker is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 33,490 in Stryker on August 25, 2024 and sell it today you would earn a total of 3,090 from holding Stryker or generate 9.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Scientific vs. Stryker
Performance |
| Timeline |
| Boston Scientific |
| Stryker |
Boston Scientific and Stryker Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Scientific and Stryker
The main advantage of trading using opposite Boston Scientific and Stryker positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Scientific position performs unexpectedly, Stryker 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 Stryker will offset losses from the drop in Stryker's long position.| Boston Scientific vs. Abbott Laboratories | Boston Scientific vs. Medtronic PLC | Boston Scientific vs. Stryker | Boston Scientific vs. Becton Dickinson and |
| Stryker vs. WESTLAKE CHEMICAL | Stryker vs. Ubisoft Entertainment SA | Stryker vs. Mitsubishi Gas Chemical | Stryker vs. XLMedia 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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