Correlation Between Richardson Electronics and Becton Dickinson

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

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

Diversification Opportunities for Richardson Electronics and Becton Dickinson

0.48

Correlation Coefficient

Richardson Electronics  Becton Dickinson

Very weak diversification

The 3 months correlation between Richardson and Becton is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Richardson Electronics and Becton Dickinson and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Becton Dickinson and Richardson Electronics 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 Richardson Electronics 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 Richardson Electronics i.e., Richardson Electronics and Becton Dickinson go up and down completely randomly.

Pair Corralation between Richardson Electronics and Becton Dickinson

Assuming the 90 days horizon Richardson Electronics is expected to under-perform the Becton Dickinson. In addition to that, Richardson Electronics is 1.56 times more volatile than Becton Dickinson and. It trades about -0.18 of its total potential returns per unit of risk. Becton Dickinson and is currently generating about -0.01 per unit of volatility. If you would invest  21,620  in Becton Dickinson and on December 30, 2024 and sell it today you would lose (420.00) from holding Becton Dickinson and or give up 1.94% of portfolio value over 90 days.

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

Richardson Electronics  vs.  Becton Dickinson and

Richardson Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Richardson Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Becton Dickinson

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Richardson Electronics and Becton Dickinson

The main advantage of trading using opposite Richardson Electronics and Becton Dickinson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Richardson Electronics 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 Richardson Electronics 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.

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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.