Correlation Between Bristol Myers and Precigen

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

Diversification Opportunities for Bristol Myers and Precigen

-0.16

Correlation Coefficient

Bristol Myers  Precigen

Good diversification

The 3 months correlation between Bristol and Precigen is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Precigen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precigen 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 Precigen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precigen has no effect on the direction of Bristol Myers i.e., Bristol Myers and Precigen go up and down completely randomly.

Pair Corralation between Bristol Myers and Precigen

Considering the 90-day investment horizon Bristol Myers Squibb is expected to under-perform the Precigen. But the stock apears to be less risky and, when comparing its historical volatility, Bristol Myers Squibb is 4.55 times less risky than Precigen. The stock trades about -0.01 of its potential returns per unit of risk. The Precigen is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  93.00  in Precigen on November 28, 2024 and sell it today you would earn a total of  80.00  from holding Precigen or generate 86.02% return on investment over 90 days.

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

Bristol Myers Squibb  vs.  Precigen

Bristol Myers Squibb

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bristol Myers Squibb has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, Bristol Myers is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Precigen

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Precigen are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical and fundamental indicators, Precigen displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bristol Myers and Precigen

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

The idea behind Bristol Myers Squibb and Precigen 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.