Correlation Between Inspire Medical and Boston Scientific

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

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

Diversification Opportunities for Inspire Medical and Boston Scientific

0.76

Correlation Coefficient

Inspire Medical  Boston Scientific

Poor diversification

The 3 months correlation between Inspire and Boston is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Inspire Medical Systems 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 Inspire Medical 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 Inspire Medical Systems 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 Inspire Medical i.e., Inspire Medical and Boston Scientific go up and down completely randomly.

Pair Corralation between Inspire Medical and Boston Scientific

Given the investment horizon of 90 days Inspire Medical Systems is expected to under-perform the Boston Scientific. In addition to that, Inspire Medical is 5.05 times more volatile than Boston Scientific Corp. It trades about -0.01 of its total potential returns per unit of risk. Boston Scientific Corp is currently generating about 0.13 per unit of volatility. If you would invest  7,250  in Boston Scientific Corp on July 27, 2024 and sell it today you would earn a total of  1,260  from holding Boston Scientific Corp or generate 17.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Inspire Medical Systems  vs.  Boston Scientific Corp

Inspire Medical Systems

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Inspire Medical Systems are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Inspire Medical reported solid returns over the last few months and may actually be approaching a breakup point.

Boston Scientific Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Scientific Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Boston Scientific may actually be approaching a critical reversion point that can send shares even higher in November 2024.

Pair Trading with Inspire Medical and Boston Scientific

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

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.