Correlation Between Dentsply Sirona and Becton Dickinson

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

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

Diversification Opportunities for Dentsply Sirona and Becton Dickinson

0.67

Correlation Coefficient

Dentsply Sirona  Becton Dickinson

Poor diversification

The 3 months correlation between Dentsply and Becton is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Dentsply Sirona and Becton Dickinson and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Becton Dickinson and Dentsply Sirona 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 Dentsply Sirona 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 Dentsply Sirona i.e., Dentsply Sirona and Becton Dickinson go up and down completely randomly.

Pair Corralation between Dentsply Sirona and Becton Dickinson

Given the investment horizon of 90 days Dentsply Sirona is expected to under-perform the Becton Dickinson. In addition to that, Dentsply Sirona is 3.47 times more volatile than Becton Dickinson and. It trades about -0.07 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  23,938  in Becton Dickinson and on October 23, 2024 and sell it today you would lose (200.00) from holding Becton Dickinson and or give up 0.84% of portfolio value over 90 days.

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

Dentsply Sirona  vs.  Becton Dickinson and

Dentsply Sirona

Risk-Adjusted Performance

0 of 100

Very Weak

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

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.

Pair Trading with Dentsply Sirona and Becton Dickinson

The main advantage of trading using opposite Dentsply Sirona and Becton Dickinson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dentsply Sirona 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 Dentsply Sirona 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.