Correlation Between Euronext and Becton Dickinson
Can any of the company-specific risk be diversified away by investing in both Euronext 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 Euronext and Becton Dickinson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Euronext NV and Becton Dickinson and, you can compare the effects of market volatilities on Euronext 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 Euronext with a short position of Becton Dickinson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Euronext and Becton Dickinson.
Diversification Opportunities for Euronext and Becton Dickinson
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Euronext and Becton is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Euronext NV and Becton Dickinson and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Becton Dickinson and Euronext 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 Euronext NV 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 Euronext i.e., Euronext and Becton Dickinson go up and down completely randomly.
Pair Corralation between Euronext and Becton Dickinson
Assuming the 90 days horizon Euronext NV is expected to generate 0.77 times more return on investment than Becton Dickinson. However, Euronext NV is 1.3 times less risky than Becton Dickinson. It trades about -0.15 of its potential returns per unit of risk. Becton Dickinson and is currently generating about -0.12 per unit of risk. If you would invest 9,317 in Euronext NV on January 24, 2024 and sell it today you would lose (272.00) from holding Euronext NV or give up 2.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Euronext NV vs. Becton Dickinson and
Performance |
| Timeline |
| Euronext NV |
| Becton Dickinson |
Euronext and Becton Dickinson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Euronext and Becton Dickinson
The main advantage of trading using opposite Euronext and Becton Dickinson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Euronext 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.| Euronext vs. Singapore Exchange Limited | Euronext vs. Japan Exchange Group | Euronext vs. TMX Group Limited | Euronext vs. Otc Markets Group |
| Becton Dickinson vs. HealthStream | Becton Dickinson vs. National Research Corp | Becton Dickinson vs. HealthEquity | Becton Dickinson vs. Health Catalyst |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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