Correlation Between Bristol Myers and Monopar Therapeutics

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

Diversification Opportunities for Bristol Myers and Monopar Therapeutics

0.06

Correlation Coefficient

Bristol Myers  Monopar Therapeutics

Significant diversification

The 3 months correlation between Bristol and Monopar is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Monopar Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monopar 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 Monopar Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monopar Therapeutics has no effect on the direction of Bristol Myers i.e., Bristol Myers and Monopar Therapeutics go up and down completely randomly.

Pair Corralation between Bristol Myers and Monopar Therapeutics

Considering the 90-day investment horizon Bristol Myers is expected to generate 8.36 times less return on investment than Monopar Therapeutics. But when comparing it to its historical volatility, Bristol Myers Squibb is 5.13 times less risky than Monopar Therapeutics. It trades about 0.09 of its potential returns per unit of risk. Monopar Therapeutics is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2,385  in Monopar Therapeutics on December 30, 2024 and sell it today you would earn a total of  1,648  from holding Monopar Therapeutics or generate 69.1% return on investment over 90 days.

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

Bristol Myers Squibb  vs.  Monopar Therapeutics

Bristol Myers Squibb

Risk-Adjusted Performance

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 April 2025.

Monopar Therapeutics

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Monopar Therapeutics are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Monopar Therapeutics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bristol Myers and Monopar Therapeutics

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

The idea behind Bristol Myers Squibb and Monopar 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.