Correlation Between Becton Dickinson and Intuitive Surgical

Can any of the company-specific risk be diversified away by investing in both Becton Dickinson and Intuitive Surgical 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 Intuitive Surgical 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 Intuitive Surgical, you can compare the effects of market volatilities on Becton Dickinson and Intuitive Surgical 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 Intuitive Surgical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Becton Dickinson and Intuitive Surgical.

Diversification Opportunities for Becton Dickinson and Intuitive Surgical

0.31

Correlation Coefficient

Becton Dickinson  Intuitive Surgical

Weak diversification

The 3 months correlation between Becton and Intuitive is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Becton Dickinson and and Intuitive Surgical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intuitive Surgical 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 Intuitive Surgical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intuitive Surgical has no effect on the direction of Becton Dickinson i.e., Becton Dickinson and Intuitive Surgical go up and down completely randomly.

Pair Corralation between Becton Dickinson and Intuitive Surgical

Considering the 90-day investment horizon Becton Dickinson and is expected to generate 0.6 times more return on investment than Intuitive Surgical. However, Becton Dickinson and is 1.66 times less risky than Intuitive Surgical. It trades about 0.02 of its potential returns per unit of risk. Intuitive Surgical is currently generating about -0.02 per unit of risk. If you would invest  22,548  in Becton Dickinson and on December 29, 2024 and sell it today you would earn a total of  202.00  from holding Becton Dickinson and or generate 0.9% return on investment over 90 days.

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

Becton Dickinson and  vs.  Intuitive Surgical

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.

Intuitive Surgical

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Becton Dickinson and Intuitive Surgical

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

The idea behind Becton Dickinson and and Intuitive Surgical 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.

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 Global Correlations module to find global opportunities by holding instruments from different markets.