Correlation Between Stryker and Boston Scientific
Can any of the company-specific risk be diversified away by investing in both Stryker 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 Stryker and Boston Scientific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stryker and Boston Scientific, you can compare the effects of market volatilities on Stryker 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 Stryker with a short position of Boston Scientific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stryker and Boston Scientific.
Diversification Opportunities for Stryker and Boston Scientific
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Stryker and Boston is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Stryker and Boston Scientific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Scientific and Stryker 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 Stryker 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 has no effect on the direction of Stryker i.e., Stryker and Boston Scientific go up and down completely randomly.
Pair Corralation between Stryker and Boston Scientific
Assuming the 90 days horizon Stryker is expected to generate 1.28 times more return on investment than Boston Scientific. However, Stryker is 1.28 times more volatile than Boston Scientific. It trades about 0.3 of its potential returns per unit of risk. Boston Scientific is currently generating about 0.25 per unit of risk. If you would invest 32,820 in Stryker on August 29, 2024 and sell it today you would earn a total of 4,300 from holding Stryker or generate 13.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stryker vs. Boston Scientific
Performance |
| Timeline |
| Stryker |
| Boston Scientific |
Stryker and Boston Scientific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stryker and Boston Scientific
The main advantage of trading using opposite Stryker and Boston Scientific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stryker 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.| Stryker vs. Superior Plus Corp | Stryker vs. NMI Holdings | Stryker vs. Origin Agritech | Stryker vs. SIVERS SEMICONDUCTORS AB |
| Boston Scientific vs. Abbott Laboratories | Boston Scientific vs. Medtronic PLC | Boston Scientific vs. Stryker | Boston Scientific vs. Becton Dickinson and |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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