Correlation Between Becton Dickinson and Sharps Technology

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

Diversification Opportunities for Becton Dickinson and Sharps Technology

0.66

Correlation Coefficient

Becton Dickinson  Sharps Technology

Poor diversification

The 3 months correlation between Becton and Sharps is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Becton Dickinson and and Sharps Technology Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sharps Technology Warrant 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 Sharps Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sharps Technology Warrant has no effect on the direction of Becton Dickinson i.e., Becton Dickinson and Sharps Technology go up and down completely randomly.

Pair Corralation between Becton Dickinson and Sharps Technology

Considering the 90-day investment horizon Becton Dickinson is expected to generate 38.73 times less return on investment than Sharps Technology. But when comparing it to its historical volatility, Becton Dickinson and is 24.06 times less risky than Sharps Technology. It trades about 0.14 of its potential returns per unit of risk. Sharps Technology Warrant is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  3.75  in Sharps Technology Warrant on October 8, 2024 and sell it today you would earn a total of  2.85  from holding Sharps Technology Warrant or generate 76.0% return on investment over 90 days.

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

Becton Dickinson and  vs.  Sharps Technology Warrant

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.

Sharps Technology Warrant

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sharps Technology Warrant are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Sharps Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Becton Dickinson and Sharps Technology

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

The idea behind Becton Dickinson and and Sharps Technology Warrant 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 Global Correlations module to find global opportunities by holding instruments from different markets.