Correlation Between Varex Imaging and Becton Dickinson

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

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

Diversification Opportunities for Varex Imaging and Becton Dickinson

-0.84

Correlation Coefficient

Varex Imaging  Becton Dickinson

Pay attention - limited upside

The 3 months correlation between Varex and Becton is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Varex Imaging Corp and Becton Dickinson and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Becton Dickinson and Varex Imaging 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 Varex Imaging Corp 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 Varex Imaging i.e., Varex Imaging and Becton Dickinson go up and down completely randomly.

Pair Corralation between Varex Imaging and Becton Dickinson

Given the investment horizon of 90 days Varex Imaging Corp is expected to generate 2.07 times more return on investment than Becton Dickinson. However, Varex Imaging is 2.07 times more volatile than Becton Dickinson and. It trades about 0.13 of its potential returns per unit of risk. Becton Dickinson and is currently generating about -0.03 per unit of risk. If you would invest  1,179  in Varex Imaging Corp on September 22, 2024 and sell it today you would earn a total of  237.00  from holding Varex Imaging Corp or generate 20.1% return on investment over 90 days.

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

Varex Imaging Corp  vs.  Becton Dickinson and

Varex Imaging Corp

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Varex Imaging Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting technical and fundamental indicators, Varex Imaging showed solid returns over the last few months and may actually be approaching a breakup point.

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 Varex Imaging and Becton Dickinson

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

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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.