Correlation Between COVIVIO HOTELS and Becton Dickinson

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

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

Diversification Opportunities for COVIVIO HOTELS and Becton Dickinson

0.52

Correlation Coefficient

COVIVIO HOTELS  Becton Dickinson

Very weak diversification

The 3 months correlation between COVIVIO and Becton is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding COVIVIO HOTELS INH and Becton Dickinson and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Becton Dickinson and COVIVIO HOTELS 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 COVIVIO HOTELS INH 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 COVIVIO HOTELS i.e., COVIVIO HOTELS and Becton Dickinson go up and down completely randomly.

Pair Corralation between COVIVIO HOTELS and Becton Dickinson

Assuming the 90 days horizon COVIVIO HOTELS is expected to generate 3.49 times less return on investment than Becton Dickinson. But when comparing it to its historical volatility, COVIVIO HOTELS INH is 1.2 times less risky than Becton Dickinson. It trades about 0.02 of its potential returns per unit of risk. Becton Dickinson and is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  21,931  in Becton Dickinson and on October 25, 2024 and sell it today you would earn a total of  1,079  from holding Becton Dickinson and or generate 4.92% return on investment over 90 days.

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

COVIVIO HOTELS INH  vs.  Becton Dickinson and

COVIVIO HOTELS INH

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in COVIVIO HOTELS INH are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, COVIVIO HOTELS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Becton Dickinson

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Becton Dickinson and are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. 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 COVIVIO HOTELS and Becton Dickinson

The main advantage of trading using opposite COVIVIO HOTELS and Becton Dickinson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COVIVIO HOTELS 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 COVIVIO HOTELS INH 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.