Correlation Between Becton Dickinson and Olympus
Can any of the company-specific risk be diversified away by investing in both Becton Dickinson and Olympus 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 Olympus 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 Olympus, you can compare the effects of market volatilities on Becton Dickinson and Olympus 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 Olympus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Becton Dickinson and Olympus.
Diversification Opportunities for Becton Dickinson and Olympus
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Becton and Olympus is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Becton Dickinson and and Olympus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olympus 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 Olympus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olympus has no effect on the direction of Becton Dickinson i.e., Becton Dickinson and Olympus go up and down completely randomly.
Pair Corralation between Becton Dickinson and Olympus
Considering the 90-day investment horizon Becton Dickinson and is expected to under-perform the Olympus. But the stock apears to be less risky and, when comparing its historical volatility, Becton Dickinson and is 1.39 times less risky than Olympus. The stock trades about -0.15 of its potential returns per unit of risk. The Olympus is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 1,671 in Olympus on September 1, 2024 and sell it today you would lose (71.00) from holding Olympus or give up 4.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Becton Dickinson and vs. Olympus
Performance |
| Timeline |
| Becton Dickinson |
| Olympus |
Becton Dickinson and Olympus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Becton Dickinson and Olympus
The main advantage of trading using opposite Becton Dickinson and Olympus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Becton Dickinson position performs unexpectedly, Olympus 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 Olympus will offset losses from the drop in Olympus' long position.| Becton Dickinson vs. Haemonetics | Becton Dickinson vs. The Cooper Companies, | Becton Dickinson vs. ICU Medical | Becton Dickinson vs. AngioDynamics |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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