Correlation Between Becton Dickinson and Agilent Technologies

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

Diversification Opportunities for Becton Dickinson and Agilent Technologies

0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between Becton and Agilent is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Becton Dickinson And and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies 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 Agilent Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agilent Technologies has no effect on the direction of Becton Dickinson i.e., Becton Dickinson and Agilent Technologies go up and down completely randomly.

Pair Corralation between Becton Dickinson and Agilent Technologies

Considering the 90-day investment horizon Becton Dickinson is expected to generate 4.94 times less return on investment than Agilent Technologies. But when comparing it to its historical volatility, Becton Dickinson And is 1.33 times less risky than Agilent Technologies. It trades about 0.01 of its potential returns per unit of risk. Agilent Technologies is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  10,343  in Agilent Technologies on June 30, 2022 and sell it today you would earn a total of  2,031  from holding Agilent Technologies or generate 19.64% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Becton Dickinson And  vs.  Agilent Technologies

 Performance (%) 
       Timeline  
Becton Dickinson And 
Becton Performance
0 of 100
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 latest abnormal performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Becton Price Channel

Agilent Technologies 
Agilent Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Agilent Technologies are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Agilent Technologies is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Agilent Price Channel

Becton Dickinson and Agilent Technologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Becton Dickinson and Agilent Technologies

The main advantage of trading using opposite Becton Dickinson and Agilent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Becton Dickinson position performs unexpectedly, Agilent Technologies 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 Agilent Technologies will offset losses from the drop in Agilent Technologies' long position.
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The idea behind Becton Dickinson And and Agilent Technologies 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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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.

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