Correlation Between Becton Dickinson and Edwards Lifesciences

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

Diversification Opportunities for Becton Dickinson and Edwards Lifesciences

-0.28

Correlation Coefficient

Becton Dickinson  Edwards Lifesciences

Very good diversification

The 3 months correlation between Becton and Edwards is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Becton Dickinson and and Edwards Lifesciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edwards Lifesciences 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 Edwards Lifesciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edwards Lifesciences has no effect on the direction of Becton Dickinson i.e., Becton Dickinson and Edwards Lifesciences go up and down completely randomly.

Pair Corralation between Becton Dickinson and Edwards Lifesciences

Assuming the 90 days horizon Becton Dickinson and is expected to under-perform the Edwards Lifesciences. In addition to that, Becton Dickinson is 1.88 times more volatile than Edwards Lifesciences. It trades about -0.09 of its total potential returns per unit of risk. Edwards Lifesciences is currently generating about 0.07 per unit of volatility. If you would invest  6,254  in Edwards Lifesciences on April 23, 2025 and sell it today you would earn a total of  339.00  from holding Edwards Lifesciences or generate 5.42% return on investment over 90 days.

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

Becton Dickinson and  vs.  Edwards Lifesciences

Becton Dickinson

Risk-Adjusted Performance

Very Weak

Over the last 90 days Becton Dickinson and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Edwards Lifesciences

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Edwards Lifesciences are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Edwards Lifesciences is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Becton Dickinson and Edwards Lifesciences

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

The idea behind Becton Dickinson and and Edwards Lifesciences 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.