Correlation Between P3 Health and Boston Scientific

Can any of the company-specific risk be diversified away by investing in both P3 Health 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 P3 Health and Boston Scientific into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between P3 Health Partners and Boston Scientific Corp, you can compare the effects of market volatilities on P3 Health 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 P3 Health with a short position of Boston Scientific. Check out your portfolio center. Please also check ongoing floating volatility patterns of P3 Health and Boston Scientific.

Diversification Opportunities for P3 Health and Boston Scientific

-0.72

Correlation Coefficient

P3 Health  Boston Scientific

Pay attention - limited upside

The 3 months correlation between PIIIW and Boston is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding P3 Health Partners 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 P3 Health 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 P3 Health Partners 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 P3 Health i.e., P3 Health and Boston Scientific go up and down completely randomly.

Pair Corralation between P3 Health and Boston Scientific

Assuming the 90 days horizon P3 Health Partners is expected to under-perform the Boston Scientific. In addition to that, P3 Health is 12.4 times more volatile than Boston Scientific Corp. It trades about -0.14 of its total potential returns per unit of risk. Boston Scientific Corp is currently generating about 0.19 per unit of volatility. If you would invest  6,621  in Boston Scientific Corp on January 30, 2024 and sell it today you would earn a total of  696.00  from holding Boston Scientific Corp or generate 10.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	28.57%
Values	Daily Returns

P3 Health Partners  vs.  Boston Scientific Corp

P3 Health Partners

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days P3 Health Partners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly inconsistent forward indicators, P3 Health showed solid returns over the last few months and may actually be approaching a breakup point.

Boston Scientific Corp

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Scientific Corp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Boston Scientific showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with P3 Health and Boston Scientific

The main advantage of trading using opposite P3 Health and Boston Scientific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if P3 Health 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.

The idea behind P3 Health Partners and Boston Scientific Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.