Correlation Between Gerresheimer and Becton Dickinson
Can any of the company-specific risk be diversified away by investing in both Gerresheimer 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 Gerresheimer and Becton Dickinson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gerresheimer AG and Becton Dickinson and, you can compare the effects of market volatilities on Gerresheimer 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 Gerresheimer with a short position of Becton Dickinson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gerresheimer and Becton Dickinson.
Diversification Opportunities for Gerresheimer and Becton Dickinson
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Gerresheimer and Becton is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Gerresheimer AG and Becton Dickinson and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Becton Dickinson and Gerresheimer 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 Gerresheimer AG 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 Gerresheimer i.e., Gerresheimer and Becton Dickinson go up and down completely randomly.
Pair Corralation between Gerresheimer and Becton Dickinson
Assuming the 90 days trading horizon Gerresheimer AG is expected to generate 1.46 times more return on investment than Becton Dickinson. However, Gerresheimer is 1.46 times more volatile than Becton Dickinson and. It trades about 0.33 of its potential returns per unit of risk. Becton Dickinson and is currently generating about -0.14 per unit of risk. If you would invest 6,665 in Gerresheimer AG on November 28, 2024 and sell it today you would earn a total of 1,355 from holding Gerresheimer AG or generate 20.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Gerresheimer AG vs. Becton Dickinson and
Performance |
| Timeline |
| Gerresheimer AG |
| Becton Dickinson |
Gerresheimer and Becton Dickinson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gerresheimer and Becton Dickinson
The main advantage of trading using opposite Gerresheimer and Becton Dickinson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gerresheimer 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.| Gerresheimer vs. Norwegian Air Shuttle | Gerresheimer vs. PT Bank Maybank | Gerresheimer vs. Chiba Bank | Gerresheimer vs. REVO INSURANCE SPA |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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