Correlation Between Becton Dickinson and Warby Parker

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

Diversification Opportunities for Becton Dickinson and Warby Parker

0.5

Correlation Coefficient

Becton Dickinson  Warby Parker

Very weak diversification

The 3 months correlation between Becton and Warby is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Becton Dickinson and and Warby Parker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warby Parker 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 Warby Parker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warby Parker has no effect on the direction of Becton Dickinson i.e., Becton Dickinson and Warby Parker go up and down completely randomly.

Pair Corralation between Becton Dickinson and Warby Parker

Considering the 90-day investment horizon Becton Dickinson and is expected to generate 0.39 times more return on investment than Warby Parker. However, Becton Dickinson and is 2.55 times less risky than Warby Parker. It trades about 0.03 of its potential returns per unit of risk. Warby Parker is currently generating about -0.12 per unit of risk. If you would invest  22,665  in Becton Dickinson and on December 20, 2024 and sell it today you would earn a total of  514.00  from holding Becton Dickinson and or generate 2.27% return on investment over 90 days.

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

Becton Dickinson and  vs.  Warby Parker

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 2 (%) 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 current stock price disturbance, may contribute to short-term losses for the investors.

Warby Parker

Risk-Adjusted Performance

Very Weak

Over the last 90 days Warby Parker has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Becton Dickinson and Warby Parker

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

The idea behind Becton Dickinson and and Warby Parker 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.