Correlation Between Brunswick and BECTON

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

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

Diversification Opportunities for Brunswick and BECTON

-0.23

Correlation Coefficient

Brunswick  BECTON

Very good diversification

The 3 months correlation between Brunswick and BECTON is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick and BECTON DICKINSON AND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BECTON DICKINSON AND and Brunswick 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 Brunswick are associated (or correlated) with BECTON. 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 AND has no effect on the direction of Brunswick i.e., Brunswick and BECTON go up and down completely randomly.

Pair Corralation between Brunswick and BECTON

Allowing for the 90-day total investment horizon Brunswick is expected to generate 2.78 times more return on investment than BECTON. However, Brunswick is 2.78 times more volatile than BECTON DICKINSON AND. It trades about 0.0 of its potential returns per unit of risk. BECTON DICKINSON AND is currently generating about -0.15 per unit of risk. If you would invest  8,018  in Brunswick on September 5, 2024 and sell it today you would lose (67.00) from holding Brunswick or give up 0.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.91%
Values	Daily Returns

Brunswick  vs.  BECTON DICKINSON AND

Brunswick

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Brunswick are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Brunswick is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

BECTON DICKINSON AND

Risk-Adjusted Performance

0 of 100

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 somewhat strong basic indicators, BECTON is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Brunswick and BECTON

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

The idea behind Brunswick 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.