Correlation Between Becton Dickinson and Alcon AG

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

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

Diversification Opportunities for Becton Dickinson and Alcon AG

0.02

Correlation Coefficient

Becton Dickinson  Alcon AG

Significant diversification

The 3 months correlation between Becton and Alcon is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Becton Dickinson and and Alcon AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcon AG and Becton Dickinson 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 Becton Dickinson and are associated (or correlated) with Alcon AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alcon AG has no effect on the direction of Becton Dickinson i.e., Becton Dickinson and Alcon AG go up and down completely randomly.

Pair Corralation between Becton Dickinson and Alcon AG

Considering the 90-day investment horizon Becton Dickinson is expected to generate 11.79 times less return on investment than Alcon AG. But when comparing it to its historical volatility, Becton Dickinson and is 1.25 times less risky than Alcon AG. It trades about 0.01 of its potential returns per unit of risk. Alcon AG is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  8,565  in Alcon AG on December 27, 2024 and sell it today you would earn a total of  1,115  from holding Alcon AG or generate 13.02% return on investment over 90 days.

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

Becton Dickinson and  vs.  Alcon AG

Becton Dickinson

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Becton Dickinson and are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, Becton Dickinson is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Alcon AG

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alcon AG are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak essential indicators, Alcon AG exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Becton Dickinson and Alcon AG

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

The idea behind Becton Dickinson and and Alcon AG 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.