Correlation Between Boston Scientific and Koninklijke Philips
Can any of the company-specific risk be diversified away by investing in both Boston Scientific and Koninklijke Philips 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 Koninklijke Philips 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 Koninklijke Philips NV, you can compare the effects of market volatilities on Boston Scientific and Koninklijke Philips 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 Koninklijke Philips. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Scientific and Koninklijke Philips.
Diversification Opportunities for Boston Scientific and Koninklijke Philips
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Boston and Koninklijke is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Boston Scientific Corp and Koninklijke Philips NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koninklijke Philips 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 Koninklijke Philips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koninklijke Philips has no effect on the direction of Boston Scientific i.e., Boston Scientific and Koninklijke Philips go up and down completely randomly.
Pair Corralation between Boston Scientific and Koninklijke Philips
Considering the 90-day investment horizon Boston Scientific Corp is expected to generate 0.38 times more return on investment than Koninklijke Philips. However, Boston Scientific Corp is 2.65 times less risky than Koninklijke Philips. It trades about 0.19 of its potential returns per unit of risk. Koninklijke Philips NV is currently generating about 0.03 per unit of risk. If you would invest 5,992 in Boston Scientific Corp on October 20, 2024 and sell it today you would earn a total of 3,874 from holding Boston Scientific Corp or generate 64.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Boston Scientific Corp vs. Koninklijke Philips NV
Performance |
| Timeline |
| Boston Scientific Corp |
| Koninklijke Philips |
Boston Scientific and Koninklijke Philips Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Scientific and Koninklijke Philips
The main advantage of trading using opposite Boston Scientific and Koninklijke Philips positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Scientific position performs unexpectedly, Koninklijke Philips 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 Koninklijke Philips will offset losses from the drop in Koninklijke Philips' long position.| Boston Scientific vs. Stryker | Boston Scientific vs. Abbott Laboratories | Boston Scientific vs. Medtronic PLC | Boston Scientific vs. DexCom Inc |
| Koninklijke Philips vs. Lonza Group | Koninklijke Philips vs. Siemens Healthineers AG | Koninklijke Philips vs. Sysmex Corp | Koninklijke Philips vs. Terumo |
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 Stocks Directory module to find actively traded stocks across global markets.
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