Correlation Between Koninklijke Philips and Boston Scientific
Can any of the company-specific risk be diversified away by investing in both Koninklijke Philips and Boston Scientific 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 Koninklijke Philips and Boston Scientific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Koninklijke Philips NV and Boston Scientific Corp, you can compare the effects of market volatilities on Koninklijke Philips and Boston Scientific 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 Koninklijke Philips with a short position of Boston Scientific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koninklijke Philips and Boston Scientific.
Diversification Opportunities for Koninklijke Philips and Boston Scientific
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Koninklijke and Boston is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Koninklijke Philips NV and Boston Scientific Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Scientific Corp and Koninklijke Philips 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 Koninklijke Philips NV are associated (or correlated) with Boston Scientific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Scientific Corp has no effect on the direction of Koninklijke Philips i.e., Koninklijke Philips and Boston Scientific go up and down completely randomly.
Pair Corralation between Koninklijke Philips and Boston Scientific
Considering the 90-day investment horizon Koninklijke Philips is expected to generate 2.25 times less return on investment than Boston Scientific. In addition to that, Koninklijke Philips is 1.38 times more volatile than Boston Scientific Corp. It trades about 0.07 of its total potential returns per unit of risk. Boston Scientific Corp is currently generating about 0.21 per unit of volatility. If you would invest 8,476 in Boston Scientific Corp on August 28, 2024 and sell it today you would earn a total of 449.00 from holding Boston Scientific Corp or generate 5.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Koninklijke Philips NV vs. Boston Scientific Corp
Performance |
| Timeline |
| Koninklijke Philips |
| Boston Scientific Corp |
Koninklijke Philips and Boston Scientific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Koninklijke Philips and Boston Scientific
The main advantage of trading using opposite Koninklijke Philips and Boston Scientific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koninklijke Philips position performs unexpectedly, Boston Scientific 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 Boston Scientific will offset losses from the drop in Boston Scientific's long position.| Koninklijke Philips vs. Heartbeam | Koninklijke Philips vs. EUDA Health Holdings | Koninklijke Philips vs. Nutex Health | Koninklijke Philips vs. Healthcare Triangle |
| Boston Scientific vs. Stryker | Boston Scientific vs. Abbott Laboratories | Boston Scientific vs. Medtronic PLC | Boston Scientific vs. DexCom Inc |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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