Correlation Between Becton Dickinson and Alcon AG

Can any of the company-specific risk be diversified away by investing in both Becton Dickinson and Alcon AG 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 Alcon AG 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 Alcon AG, you can compare the effects of market volatilities on Becton Dickinson and Alcon AG 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 Alcon AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Becton Dickinson and Alcon AG.

Diversification Opportunities for Becton Dickinson and Alcon AG

0.05

Correlation Coefficient

Becton Dickinson  Alcon AG

Significant diversification

The 3 months correlation between Becton and Alcon is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Becton Dickinson and and Alcon AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcon AG 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 Alcon AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alcon AG has no effect on the direction of Becton Dickinson i.e., Becton Dickinson and Alcon AG go up and down completely randomly.

Pair Corralation between Becton Dickinson and Alcon AG

Considering the 90-day investment horizon Becton Dickinson and is expected to under-perform the Alcon AG. But the stock apears to be less risky and, when comparing its historical volatility, Becton Dickinson and is 1.22 times less risky than Alcon AG. The stock trades about -0.1 of its potential returns per unit of risk. The Alcon AG is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  8,387  in Alcon AG on January 6, 2025 and sell it today you would lose (5.00) from holding Alcon AG or give up 0.06% of portfolio value over 90 days.

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

Becton Dickinson and  vs.  Alcon AG

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. In spite of latest unsteady performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Alcon AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alcon AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Alcon AG is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Becton Dickinson and Alcon AG

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

The idea behind Becton Dickinson and and Alcon AG 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.