Correlation Between STMICROELECTRONICS and Becton Dickinson
Can any of the company-specific risk be diversified away by investing in both STMICROELECTRONICS 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 STMICROELECTRONICS and Becton Dickinson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMICROELECTRONICS and Becton Dickinson and, you can compare the effects of market volatilities on STMICROELECTRONICS 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 STMICROELECTRONICS with a short position of Becton Dickinson. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMICROELECTRONICS and Becton Dickinson.
Diversification Opportunities for STMICROELECTRONICS and Becton Dickinson
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between STMICROELECTRONICS and Becton is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding STMICROELECTRONICS and Becton Dickinson and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Becton Dickinson and STMICROELECTRONICS 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 STMICROELECTRONICS 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 STMICROELECTRONICS i.e., STMICROELECTRONICS and Becton Dickinson go up and down completely randomly.
Pair Corralation between STMICROELECTRONICS and Becton Dickinson
Assuming the 90 days trading horizon STMICROELECTRONICS is expected to generate 1.27 times more return on investment than Becton Dickinson. However, STMICROELECTRONICS is 1.27 times more volatile than Becton Dickinson and. It trades about 0.02 of its potential returns per unit of risk. Becton Dickinson and is currently generating about -0.07 per unit of risk. If you would invest 2,485 in STMICROELECTRONICS on September 12, 2024 and sell it today you would earn a total of 14.00 from holding STMICROELECTRONICS or generate 0.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
STMICROELECTRONICS vs. Becton Dickinson and
Performance |
| Timeline |
| STMICROELECTRONICS |
| Becton Dickinson |
STMICROELECTRONICS and Becton Dickinson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMICROELECTRONICS and Becton Dickinson
The main advantage of trading using opposite STMICROELECTRONICS and Becton Dickinson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMICROELECTRONICS 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.| STMICROELECTRONICS vs. Apple Inc | STMICROELECTRONICS vs. Apple Inc | STMICROELECTRONICS vs. Apple Inc | STMICROELECTRONICS vs. Apple Inc |
| Becton Dickinson vs. Superior Plus Corp | Becton Dickinson vs. NMI Holdings | Becton Dickinson vs. SIVERS SEMICONDUCTORS AB | Becton Dickinson vs. NorAm Drilling AS |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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