Correlation Between Boston Scientific and CochLear
Can any of the company-specific risk be diversified away by investing in both Boston Scientific and CochLear 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 CochLear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Scientific Corp and CochLear Ltd ADR, you can compare the effects of market volatilities on Boston Scientific and CochLear 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 CochLear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Scientific and CochLear.
Diversification Opportunities for Boston Scientific and CochLear
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Boston and CochLear is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Boston Scientific Corp and CochLear Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CochLear ADR 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 Corp are associated (or correlated) with CochLear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CochLear ADR has no effect on the direction of Boston Scientific i.e., Boston Scientific and CochLear go up and down completely randomly.
Pair Corralation between Boston Scientific and CochLear
Considering the 90-day investment horizon Boston Scientific Corp is expected to generate 0.92 times more return on investment than CochLear. However, Boston Scientific Corp is 1.08 times less risky than CochLear. It trades about 0.27 of its potential returns per unit of risk. CochLear Ltd ADR is currently generating about 0.24 per unit of risk. If you would invest 8,456 in Boston Scientific Corp on August 30, 2024 and sell it today you would earn a total of 619.00 from holding Boston Scientific Corp or generate 7.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Scientific Corp vs. CochLear Ltd ADR
Performance |
| Timeline |
| Boston Scientific Corp |
| CochLear ADR |
Boston Scientific and CochLear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Scientific and CochLear
The main advantage of trading using opposite Boston Scientific and CochLear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Scientific position performs unexpectedly, CochLear 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 CochLear will offset losses from the drop in CochLear's long position.| Boston Scientific vs. Stryker | Boston Scientific vs. Abbott Laboratories | Boston Scientific vs. Medtronic PLC | Boston Scientific vs. DexCom Inc |
| CochLear vs. Smith Nephew SNATS | CochLear vs. Integer Holdings Corp | CochLear vs. Demant AS ADR | CochLear vs. GN Store Nord |
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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