Correlation Between Bristol Myers and Enliven Therapeutics

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

Diversification Opportunities for Bristol Myers and Enliven Therapeutics

-0.61

Correlation Coefficient

Bristol Myers  Enliven Therapeutics

Excellent diversification

The 3 months correlation between Bristol and Enliven is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Enliven Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enliven Therapeutics 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 Enliven Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enliven Therapeutics has no effect on the direction of Bristol Myers i.e., Bristol Myers and Enliven Therapeutics go up and down completely randomly.

Pair Corralation between Bristol Myers and Enliven Therapeutics

Considering the 90-day investment horizon Bristol Myers is expected to generate 2.82 times less return on investment than Enliven Therapeutics. But when comparing it to its historical volatility, Bristol Myers Squibb is 2.77 times less risky than Enliven Therapeutics. It trades about 0.05 of its potential returns per unit of risk. Enliven Therapeutics is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,655  in Enliven Therapeutics on October 24, 2024 and sell it today you would earn a total of  613.50  from holding Enliven Therapeutics or generate 37.07% 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.  Enliven Therapeutics

Bristol Myers Squibb

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bristol Myers Squibb are ranked lower than 6 (%) 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.

Enliven Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enliven Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Bristol Myers and Enliven Therapeutics

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

The idea behind Bristol Myers Squibb and Enliven Therapeutics 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.