Correlation Between Becton Dickinson and Baxter International
Can any of the company-specific risk be diversified away by investing in both Becton Dickinson and Baxter International 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 Baxter International 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 Baxter International, you can compare the effects of market volatilities on Becton Dickinson and Baxter International 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 Baxter International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Becton Dickinson and Baxter International.
Diversification Opportunities for Becton Dickinson and Baxter International
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Becton and Baxter is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Becton Dickinson and and Baxter International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baxter International 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 Baxter International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baxter International has no effect on the direction of Becton Dickinson i.e., Becton Dickinson and Baxter International go up and down completely randomly.
Pair Corralation between Becton Dickinson and Baxter International
Considering the 90-day investment horizon Becton Dickinson and is expected to under-perform the Baxter International. But the stock apears to be less risky and, when comparing its historical volatility, Becton Dickinson and is 1.36 times less risky than Baxter International. The stock trades about -0.12 of its potential returns per unit of risk. The Baxter International is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 4,179 in Baxter International on January 25, 2024 and sell it today you would lose (96.00) from holding Baxter International or give up 2.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Becton Dickinson and vs. Baxter International
Performance |
| Timeline |
| Becton Dickinson |
| Baxter International |
Becton Dickinson and Baxter International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Becton Dickinson and Baxter International
The main advantage of trading using opposite Becton Dickinson and Baxter International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Becton Dickinson position performs unexpectedly, Baxter International 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 Baxter International will offset losses from the drop in Baxter International's long position.| Becton Dickinson vs. Haemonetics | Becton Dickinson vs. The Cooper Companies | Becton Dickinson vs. ICU Medical | Becton Dickinson vs. AngioDynamics |
| Baxter International vs. Embecta Corp | Baxter International vs. West Pharmaceutical Services | Baxter International vs. ResMed Inc | Baxter International vs. The Cooper Companies |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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