Correlation Between Baxter International and Becton Dickinson
Can any of the company-specific risk be diversified away by investing in both Baxter International 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 Baxter International and Becton Dickinson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baxter International and Becton Dickinson and, you can compare the effects of market volatilities on Baxter International 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 Baxter International with a short position of Becton Dickinson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baxter International and Becton Dickinson.
Diversification Opportunities for Baxter International and Becton Dickinson
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Baxter and Becton is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Baxter International and Becton Dickinson and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Becton Dickinson and Baxter International 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 Baxter International 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 Baxter International i.e., Baxter International and Becton Dickinson go up and down completely randomly.
Pair Corralation between Baxter International and Becton Dickinson
Considering the 90-day investment horizon Baxter International is expected to generate 1.42 times more return on investment than Becton Dickinson. However, Baxter International is 1.42 times more volatile than Becton Dickinson and. It trades about 0.14 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 2,906 in Baxter International on December 27, 2024 and sell it today you would earn a total of 464.00 from holding Baxter International or generate 15.97% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Baxter International vs. Becton Dickinson and
Performance |
Timeline |
Baxter International |
Becton Dickinson |
Baxter International and Becton Dickinson Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Baxter International and Becton Dickinson
The main advantage of trading using opposite Baxter International and Becton Dickinson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baxter International 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.Baxter International vs. Embecta Corp | Baxter International vs. West Pharmaceutical Services | Baxter International vs. ResMed Inc | Baxter International vs. The Cooper Companies, |
Becton Dickinson vs. Haemonetics | Becton Dickinson vs. The Cooper Companies, | Becton Dickinson vs. ICU Medical | Becton Dickinson vs. AngioDynamics |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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