Correlation Between Boston Scientific and Avita Medical
Can any of the company-specific risk be diversified away by investing in both Boston Scientific and Avita Medical 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 Avita Medical 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 Avita Medical, you can compare the effects of market volatilities on Boston Scientific and Avita Medical 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 Avita Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Scientific and Avita Medical.
Diversification Opportunities for Boston Scientific and Avita Medical
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Boston and Avita is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Boston Scientific Corp and Avita Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avita Medical 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 Avita Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avita Medical has no effect on the direction of Boston Scientific i.e., Boston Scientific and Avita Medical go up and down completely randomly.
Pair Corralation between Boston Scientific and Avita Medical
Considering the 90-day investment horizon Boston Scientific Corp is expected to generate 0.39 times more return on investment than Avita Medical. However, Boston Scientific Corp is 2.58 times less risky than Avita Medical. It trades about 0.1 of its potential returns per unit of risk. Avita Medical is currently generating about -0.07 per unit of risk. If you would invest 6,699 in Boston Scientific Corp on December 30, 2023 and sell it today you would earn a total of 150.00 from holding Boston Scientific Corp or generate 2.24% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Boston Scientific Corp vs. Avita Medical
Performance |
Timeline |
Boston Scientific Corp |
Avita Medical |
Boston Scientific and Avita Medical Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Boston Scientific and Avita Medical
The main advantage of trading using opposite Boston Scientific and Avita Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Scientific position performs unexpectedly, Avita Medical 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 Avita Medical will offset losses from the drop in Avita Medical's long position.Boston Scientific vs. Nextplat Corp | Boston Scientific vs. Summit Materials | Boston Scientific vs. Ituran Location And | Boston Scientific vs. Apogee Enterprises |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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