Correlation Between Akamai Technologies, and Bristol Myers

Can any of the company-specific risk be diversified away by investing in both Akamai Technologies, and Bristol Myers 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 Akamai Technologies, and Bristol Myers into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Akamai Technologies, and Bristol Myers Squibb, you can compare the effects of market volatilities on Akamai Technologies, and Bristol Myers 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 Akamai Technologies, with a short position of Bristol Myers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Akamai Technologies, and Bristol Myers.

Diversification Opportunities for Akamai Technologies, and Bristol Myers

0.14

Correlation Coefficient

Akamai Technologies,  Bristol Myers

Average diversification

The 3 months correlation between Akamai and Bristol is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Akamai Technologies, and Bristol Myers Squibb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bristol Myers Squibb and Akamai Technologies, 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 Akamai Technologies, are associated (or correlated) with Bristol Myers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bristol Myers Squibb has no effect on the direction of Akamai Technologies, i.e., Akamai Technologies, and Bristol Myers go up and down completely randomly.

Pair Corralation between Akamai Technologies, and Bristol Myers

Assuming the 90 days trading horizon Akamai Technologies, is expected to generate 0.74 times more return on investment than Bristol Myers. However, Akamai Technologies, is 1.36 times less risky than Bristol Myers. It trades about 0.06 of its potential returns per unit of risk. Bristol Myers Squibb is currently generating about 0.03 per unit of risk. If you would invest  3,644  in Akamai Technologies, on October 4, 2024 and sell it today you would earn a total of  1,311  from holding Akamai Technologies, or generate 35.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	82.66%
Values	Daily Returns

Akamai Technologies,  vs.  Bristol Myers Squibb

Akamai Technologies,

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Akamai Technologies, are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain forward-looking signals, Akamai Technologies, may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Bristol Myers Squibb

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bristol Myers Squibb are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bristol Myers sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Akamai Technologies, and Bristol Myers

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

The idea behind Akamai Technologies, and Bristol Myers Squibb 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.