Correlation Between Medtronic PLC and Becton Dickinson

Can any of the company-specific risk be diversified away by investing in both Medtronic PLC and Becton Dickinson 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 Medtronic PLC and Becton Dickinson into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Medtronic PLC and Becton Dickinson and, you can compare the effects of market volatilities on Medtronic PLC and Becton Dickinson 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 Medtronic PLC with a short position of Becton Dickinson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medtronic PLC and Becton Dickinson.

Diversification Opportunities for Medtronic PLC and Becton Dickinson

0.13

Correlation Coefficient

Medtronic PLC  Becton Dickinson

Average diversification

The 3 months correlation between Medtronic and Becton is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Medtronic PLC and Becton Dickinson and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Becton Dickinson and Medtronic PLC 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 Medtronic PLC are associated (or correlated) with Becton Dickinson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Becton Dickinson has no effect on the direction of Medtronic PLC i.e., Medtronic PLC and Becton Dickinson go up and down completely randomly.

Pair Corralation between Medtronic PLC and Becton Dickinson

Assuming the 90 days horizon Medtronic PLC is expected to generate 1.0 times more return on investment than Becton Dickinson. However, Medtronic PLC is 1.0 times more volatile than Becton Dickinson and. It trades about 0.09 of its potential returns per unit of risk. Becton Dickinson and is currently generating about -0.01 per unit of risk. If you would invest  7,749  in Medtronic PLC on December 23, 2024 and sell it today you would earn a total of  594.00  from holding Medtronic PLC or generate 7.67% return on investment over 90 days.

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

Medtronic PLC  vs.  Becton Dickinson and

Medtronic PLC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Medtronic PLC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Medtronic PLC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Becton Dickinson

Risk-Adjusted Performance

Very Weak

Over the last 90 days Becton Dickinson and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Becton Dickinson is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Medtronic PLC and Becton Dickinson

The main advantage of trading using opposite Medtronic PLC and Becton Dickinson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medtronic PLC position performs unexpectedly, Becton Dickinson 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 Becton Dickinson will offset losses from the drop in Becton Dickinson's long position.

The idea behind Medtronic PLC and Becton Dickinson and 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.