Correlation Between A1TM34 and Bristol Myers
Can any of the company-specific risk be diversified away by investing in both A1TM34 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 A1TM34 and Bristol Myers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between A1TM34 and Bristol Myers Squibb, you can compare the effects of market volatilities on A1TM34 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 A1TM34 with a short position of Bristol Myers. Check out your portfolio center. Please also check ongoing floating volatility patterns of A1TM34 and Bristol Myers.
Diversification Opportunities for A1TM34 and Bristol Myers
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between A1TM34 and Bristol is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding A1TM34 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 A1TM34 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 A1TM34 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 A1TM34 i.e., A1TM34 and Bristol Myers go up and down completely randomly.
Pair Corralation between A1TM34 and Bristol Myers
Assuming the 90 days trading horizon A1TM34 is expected to generate 2.06 times less return on investment than Bristol Myers. But when comparing it to its historical volatility, A1TM34 is 2.45 times less risky than Bristol Myers. It trades about 0.23 of its potential returns per unit of risk. Bristol Myers Squibb is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 27,226 in Bristol Myers Squibb on September 25, 2024 and sell it today you would earn a total of 8,299 from holding Bristol Myers Squibb or generate 30.48% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 98.41% |
Values | Daily Returns |
A1TM34 vs. Bristol Myers Squibb
Performance |
Timeline |
A1TM34 |
Bristol Myers Squibb |
A1TM34 and Bristol Myers Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with A1TM34 and Bristol Myers
The main advantage of trading using opposite A1TM34 and Bristol Myers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if A1TM34 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.A1TM34 vs. Taiwan Semiconductor Manufacturing | A1TM34 vs. Apple Inc | A1TM34 vs. Alibaba Group Holding | A1TM34 vs. Microsoft |
Bristol Myers vs. Waste Management | Bristol Myers vs. MAHLE Metal Leve | Bristol Myers vs. UnitedHealth Group Incorporated | Bristol Myers vs. Autohome |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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