Correlation Between Bristol Myers and Evogene

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

Diversification Opportunities for Bristol Myers and Evogene

-0.86

Correlation Coefficient

Bristol Myers  Evogene

Pay attention - limited upside

The 3 months correlation between Bristol and Evogene is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Evogene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evogene 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 Evogene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evogene has no effect on the direction of Bristol Myers i.e., Bristol Myers and Evogene go up and down completely randomly.

Pair Corralation between Bristol Myers and Evogene

Considering the 90-day investment horizon Bristol Myers Squibb is expected to generate 0.38 times more return on investment than Evogene. However, Bristol Myers Squibb is 2.65 times less risky than Evogene. It trades about 0.14 of its potential returns per unit of risk. Evogene is currently generating about -0.18 per unit of risk. If you would invest  4,996  in Bristol Myers Squibb on September 1, 2024 and sell it today you would earn a total of  926.00  from holding Bristol Myers Squibb or generate 18.53% return on investment over 90 days.

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

Bristol Myers Squibb  vs.  Evogene

Bristol Myers Squibb

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bristol Myers Squibb are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Bristol Myers showed solid returns over the last few months and may actually be approaching a breakup point.

Evogene

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evogene has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Bristol Myers and Evogene

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

The idea behind Bristol Myers Squibb and Evogene 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.