Correlation Between Shockwave Medical and Boston Scientific

Can any of the company-specific risk be diversified away by investing in both Shockwave 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 Shockwave 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 Shockwave Medical and Boston Scientific Corp, you can compare the effects of market volatilities on Shockwave 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 Shockwave Medical with a short position of Boston Scientific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shockwave Medical and Boston Scientific.

Diversification Opportunities for Shockwave Medical and Boston Scientific

-0.14

Correlation Coefficient

Shockwave Medical  Boston Scientific

Good diversification

The 3 months correlation between Shockwave and Boston is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Shockwave Medical 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 Shockwave 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 Shockwave Medical 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 Shockwave Medical i.e., Shockwave Medical and Boston Scientific go up and down completely randomly.

Pair Corralation between Shockwave Medical and Boston Scientific

Given the investment horizon of 90 days Shockwave Medical is expected to generate 5.89 times less return on investment than Boston Scientific. In addition to that, Shockwave Medical is 2.51 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  4,196  in Boston Scientific Corp on July 27, 2024 and sell it today you would earn a total of  4,314  from holding Boston Scientific Corp or generate 102.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	36.03%
Values	Daily Returns

Shockwave Medical  vs.  Boston Scientific Corp

Shockwave Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shockwave Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Shockwave Medical is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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 Shockwave Medical and Boston Scientific

The main advantage of trading using opposite Shockwave Medical and Boston Scientific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shockwave 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 Shockwave Medical 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.