Correlation Between EssilorLuxottica and Becton Dickinson
Can any of the company-specific risk be diversified away by investing in both EssilorLuxottica 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 EssilorLuxottica and Becton Dickinson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EssilorLuxottica Socit anonyme and Becton Dickinson and, you can compare the effects of market volatilities on EssilorLuxottica 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 EssilorLuxottica with a short position of Becton Dickinson. Check out your portfolio center. Please also check ongoing floating volatility patterns of EssilorLuxottica and Becton Dickinson.
Diversification Opportunities for EssilorLuxottica and Becton Dickinson
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EssilorLuxottica and Becton is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding EssilorLuxottica Socit anonyme and Becton Dickinson and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Becton Dickinson and EssilorLuxottica 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 EssilorLuxottica Socit anonyme 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 EssilorLuxottica i.e., EssilorLuxottica and Becton Dickinson go up and down completely randomly.
Pair Corralation between EssilorLuxottica and Becton Dickinson
Assuming the 90 days horizon EssilorLuxottica Socit anonyme is expected to generate 1.2 times more return on investment than Becton Dickinson. However, EssilorLuxottica is 1.2 times more volatile than Becton Dickinson and. It trades about 0.03 of its potential returns per unit of risk. Becton Dickinson and is currently generating about -0.17 per unit of risk. If you would invest 23,888 in EssilorLuxottica Socit anonyme on August 27, 2024 and sell it today you would earn a total of 162.00 from holding EssilorLuxottica Socit anonyme or generate 0.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EssilorLuxottica Socit anonyme vs. Becton Dickinson and
Performance |
| Timeline |
| EssilorLuxottica Socit |
| Becton Dickinson |
EssilorLuxottica and Becton Dickinson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EssilorLuxottica and Becton Dickinson
The main advantage of trading using opposite EssilorLuxottica and Becton Dickinson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EssilorLuxottica 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.| EssilorLuxottica vs. GlucoTrack | EssilorLuxottica vs. Sharps Technology | EssilorLuxottica vs. Utah Medical Products | EssilorLuxottica vs. Innovative Eyewear |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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