Correlation Between Bristol Myers and Bruker

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

Diversification Opportunities for Bristol Myers and Bruker

-0.74

Correlation Coefficient

Bristol Myers  Bruker

Pay attention - limited upside

The 3 months correlation between Bristol and Bruker is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Bruker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bruker 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 Bruker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bruker has no effect on the direction of Bristol Myers i.e., Bristol Myers and Bruker go up and down completely randomly.

Pair Corralation between Bristol Myers and Bruker

Considering the 90-day investment horizon Bristol Myers Squibb is expected to under-perform the Bruker. But the stock apears to be less risky and, when comparing its historical volatility, Bristol Myers Squibb is 2.5 times less risky than Bruker. The stock trades about -0.11 of its potential returns per unit of risk. The Bruker is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  4,821  in Bruker on September 20, 2024 and sell it today you would earn a total of  691.00  from holding Bruker or generate 14.33% return on investment over 90 days.

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

Bristol Myers Squibb  vs.  Bruker

Bristol Myers Squibb

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bristol Myers Squibb are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain primary indicators, Bristol Myers showed solid returns over the last few months and may actually be approaching a breakup point.

Bruker

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bruker has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's forward-looking signals remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Bristol Myers and Bruker

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

The idea behind Bristol Myers Squibb and Bruker 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.