Correlation Between Intuitive Surgical and Becton Dickinson

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

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

Diversification Opportunities for Intuitive Surgical and Becton Dickinson

0.45

Correlation Coefficient

Intuitive Surgical  Becton Dickinson

Very weak diversification

The 3 months correlation between Intuitive and Becton is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Intuitive Surgical and Becton Dickinson and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Becton Dickinson and Intuitive Surgical 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 Intuitive Surgical are associated (or correlated) with Becton Dickinson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Becton Dickinson has no effect on the direction of Intuitive Surgical i.e., Intuitive Surgical and Becton Dickinson go up and down completely randomly.

Pair Corralation between Intuitive Surgical and Becton Dickinson

Given the investment horizon of 90 days Intuitive Surgical is expected to generate 1.25 times more return on investment than Becton Dickinson. However, Intuitive Surgical is 1.25 times more volatile than Becton Dickinson and. It trades about 0.08 of its potential returns per unit of risk. Becton Dickinson and is currently generating about 0.04 per unit of risk. If you would invest  54,200  in Intuitive Surgical on November 29, 2024 and sell it today you would earn a total of  3,893  from holding Intuitive Surgical or generate 7.18% return on investment over 90 days.

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

Intuitive Surgical  vs.  Becton Dickinson and

Intuitive Surgical

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Intuitive Surgical are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Intuitive Surgical may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Becton Dickinson

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Becton Dickinson and are ranked lower than 3 (%) 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.

Pair Trading with Intuitive Surgical and Becton Dickinson

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

The idea behind Intuitive Surgical and Becton Dickinson and 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.