Correlation Between Bristol Myers and Altimmune

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

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

Diversification Opportunities for Bristol Myers and Altimmune

0.8

Correlation Coefficient

Bristol Myers  Altimmune

Very poor diversification

The 3 months correlation between Bristol and Altimmune is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Altimmune in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altimmune and Bristol Myers 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 Bristol Myers Squibb are associated (or correlated) with Altimmune. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altimmune has no effect on the direction of Bristol Myers i.e., Bristol Myers and Altimmune go up and down completely randomly.

Pair Corralation between Bristol Myers and Altimmune

Considering the 90-day investment horizon Bristol Myers Squibb is expected to generate 0.33 times more return on investment than Altimmune. However, Bristol Myers Squibb is 3.01 times less risky than Altimmune. It trades about -0.09 of its potential returns per unit of risk. Altimmune is currently generating about -0.35 per unit of risk. If you would invest  5,837  in Bristol Myers Squibb on October 5, 2024 and sell it today you would lose (158.00) from holding Bristol Myers Squibb or give up 2.71% of portfolio value over 90 days.

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

Bristol Myers Squibb  vs.  Altimmune

Bristol Myers Squibb

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bristol Myers Squibb are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal primary indicators, Bristol Myers may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Altimmune

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Altimmune are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent essential indicators, Altimmune unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bristol Myers and Altimmune

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

The idea behind Bristol Myers Squibb and Altimmune 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.