Correlation Between Boston Scientific and Universal Health
Can any of the company-specific risk be diversified away by investing in both Boston Scientific and Universal Health 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 Universal Health 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 Universal Health Services, you can compare the effects of market volatilities on Boston Scientific and Universal Health 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 Universal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Scientific and Universal Health.
Diversification Opportunities for Boston Scientific and Universal Health
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Boston and Universal is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Boston Scientific Corp and Universal Health Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Health Services 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 Universal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Health Services has no effect on the direction of Boston Scientific i.e., Boston Scientific and Universal Health go up and down completely randomly.
Pair Corralation between Boston Scientific and Universal Health
Considering the 90-day investment horizon Boston Scientific Corp is expected to generate 0.51 times more return on investment than Universal Health. However, Boston Scientific Corp is 1.95 times less risky than Universal Health. It trades about 0.1 of its potential returns per unit of risk. Universal Health Services is currently generating about -0.27 per unit of risk. If you would invest 8,745 in Boston Scientific Corp on August 24, 2024 and sell it today you would earn a total of 255.00 from holding Boston Scientific Corp or generate 2.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Scientific Corp vs. Universal Health Services
Performance |
| Timeline |
| Boston Scientific Corp |
| Universal Health Services |
Boston Scientific and Universal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Scientific and Universal Health
The main advantage of trading using opposite Boston Scientific and Universal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Scientific position performs unexpectedly, Universal Health 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 Universal Health will offset losses from the drop in Universal Health's long position.| Boston Scientific vs. Stryker | Boston Scientific vs. Abbott Laboratories | Boston Scientific vs. Medtronic PLC | Boston Scientific vs. DexCom Inc |
| Universal Health vs. The Ensign Group | Universal Health vs. Addus HomeCare | Universal Health vs. Encompass Health Corp | Universal Health vs. Surgery Partners |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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