Correlation Between Becton Dickinson and Value Line
Can any of the company-specific risk be diversified away by investing in both Becton Dickinson and Value Line 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 Value Line 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 Value Line, you can compare the effects of market volatilities on Becton Dickinson and Value Line 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 Value Line. Check out your portfolio center. Please also check ongoing floating volatility patterns of Becton Dickinson and Value Line.
Diversification Opportunities for Becton Dickinson and Value Line
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Becton and Value is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Becton Dickinson and and Value Line in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Line 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 Value Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Line has no effect on the direction of Becton Dickinson i.e., Becton Dickinson and Value Line go up and down completely randomly.
Pair Corralation between Becton Dickinson and Value Line
Considering the 90-day investment horizon Becton Dickinson and is expected to under-perform the Value Line. But the stock apears to be less risky and, when comparing its historical volatility, Becton Dickinson and is 2.69 times less risky than Value Line. The stock trades about -0.12 of its potential returns per unit of risk. The Value Line is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,899 in Value Line on January 25, 2024 and sell it today you would earn a total of 300.99 from holding Value Line or generate 7.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Becton Dickinson and vs. Value Line
Performance |
| Timeline |
| Becton Dickinson |
| Value Line |
Becton Dickinson and Value Line Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Becton Dickinson and Value Line
The main advantage of trading using opposite Becton Dickinson and Value Line positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Becton Dickinson position performs unexpectedly, Value Line 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 Value Line will offset losses from the drop in Value Line's long position.| Becton Dickinson vs. Haemonetics | Becton Dickinson vs. The Cooper Companies | Becton Dickinson vs. ICU Medical | Becton Dickinson vs. AngioDynamics |
| Value Line vs. SP Global | Value Line vs. Moodys | Value Line vs. MSCI Inc | Value Line vs. FactSet Research Systems |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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