Correlation Between Becton Dickinson and Electrocore LLC

Can any of the company-specific risk be diversified away by investing in both Becton Dickinson and Electrocore LLC 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 Electrocore LLC 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 Electrocore LLC, you can compare the effects of market volatilities on Becton Dickinson and Electrocore LLC 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 Electrocore LLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Becton Dickinson and Electrocore LLC.

Diversification Opportunities for Becton Dickinson and Electrocore LLC

-0.08

Correlation Coefficient

Becton Dickinson  Electrocore LLC

Good diversification

The 3 months correlation between Becton and Electrocore is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Becton Dickinson and and Electrocore LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electrocore LLC 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 Electrocore LLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electrocore LLC has no effect on the direction of Becton Dickinson i.e., Becton Dickinson and Electrocore LLC go up and down completely randomly.

Pair Corralation between Becton Dickinson and Electrocore LLC

Considering the 90-day investment horizon Becton Dickinson and is expected to under-perform the Electrocore LLC. But the stock apears to be less risky and, when comparing its historical volatility, Becton Dickinson and is 3.42 times less risky than Electrocore LLC. The stock trades about -0.03 of its potential returns per unit of risk. The Electrocore LLC is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  600.00  in Electrocore LLC on January 25, 2024 and sell it today you would lose (34.00) from holding Electrocore LLC or give up 5.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Becton Dickinson and  vs.  Electrocore LLC

Becton Dickinson

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Becton Dickinson and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Becton Dickinson is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Electrocore LLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Electrocore LLC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in May 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Becton Dickinson and Electrocore LLC

The main advantage of trading using opposite Becton Dickinson and Electrocore LLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Becton Dickinson position performs unexpectedly, Electrocore LLC 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 Electrocore LLC will offset losses from the drop in Electrocore LLC's long position.

The idea behind Becton Dickinson and and Electrocore LLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.