Correlation Between Becton Dickinson and Spine Injury

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

Diversification Opportunities for Becton Dickinson and Spine Injury

-0.53

Correlation Coefficient

Becton Dickinson  Spine Injury

Excellent diversification

The 3 months correlation between Becton and Spine is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Becton Dickinson and and Spine Injury Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spine Injury Solutions 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 Spine Injury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spine Injury Solutions has no effect on the direction of Becton Dickinson i.e., Becton Dickinson and Spine Injury go up and down completely randomly.

Pair Corralation between Becton Dickinson and Spine Injury

Considering the 90-day investment horizon Becton Dickinson and is expected to generate 1.09 times more return on investment than Spine Injury. However, Becton Dickinson is 1.09 times more volatile than Spine Injury Solutions. It trades about 0.32 of its potential returns per unit of risk. Spine Injury Solutions is currently generating about 0.01 per unit of risk. If you would invest  22,695  in Becton Dickinson and on October 25, 2024 and sell it today you would earn a total of  1,097  from holding Becton Dickinson and or generate 4.83% return on investment over 90 days.

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

Becton Dickinson and  vs.  Spine Injury Solutions

Becton Dickinson

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. 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.

Spine Injury Solutions

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Spine Injury Solutions are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Spine Injury is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Becton Dickinson and Spine Injury

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

The idea behind Becton Dickinson and and Spine Injury Solutions 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.