Correlation Between ICU Medical and Becton Dickinson
Can any of the company-specific risk be diversified away by investing in both ICU Medical 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 ICU Medical and Becton Dickinson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ICU Medical and Becton Dickinson and, you can compare the effects of market volatilities on ICU Medical 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 ICU Medical with a short position of Becton Dickinson. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICU Medical and Becton Dickinson.
Diversification Opportunities for ICU Medical and Becton Dickinson
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ICU and Becton is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding ICU Medical and Becton Dickinson and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Becton Dickinson and ICU Medical 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 ICU Medical 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 ICU Medical i.e., ICU Medical and Becton Dickinson go up and down completely randomly.
Pair Corralation between ICU Medical and Becton Dickinson
Given the investment horizon of 90 days ICU Medical is expected to generate 0.89 times more return on investment than Becton Dickinson. However, ICU Medical is 1.12 times less risky than Becton Dickinson. It trades about -0.16 of its potential returns per unit of risk. Becton Dickinson and is currently generating about -0.18 per unit of risk. If you would invest 17,770 in ICU Medical on August 24, 2024 and sell it today you would lose (886.00) from holding ICU Medical or give up 4.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ICU Medical vs. Becton Dickinson and
Performance |
| Timeline |
| ICU Medical |
| Becton Dickinson |
ICU Medical and Becton Dickinson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ICU Medical and Becton Dickinson
The main advantage of trading using opposite ICU Medical and Becton Dickinson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICU Medical 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.| ICU Medical vs. Merit Medical Systems | ICU Medical vs. The Cooper Companies, | ICU Medical vs. AngioDynamics | ICU Medical vs. AptarGroup |
| Becton Dickinson vs. Haemonetics | Becton Dickinson vs. The Cooper Companies, | Becton Dickinson vs. ICU Medical | Becton Dickinson vs. AngioDynamics |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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