Correlation Between Bristol Myers and Solid Biosciences

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

Diversification Opportunities for Bristol Myers and Solid Biosciences

-0.03

Correlation Coefficient

Bristol Myers  Solid Biosciences

Good diversification

The 3 months correlation between Bristol and Solid is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Solid Biosciences LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solid Biosciences LLC 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 Solid Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solid Biosciences LLC has no effect on the direction of Bristol Myers i.e., Bristol Myers and Solid Biosciences go up and down completely randomly.

Pair Corralation between Bristol Myers and Solid Biosciences

Considering the 90-day investment horizon Bristol Myers Squibb is expected to under-perform the Solid Biosciences. But the stock apears to be less risky and, when comparing its historical volatility, Bristol Myers Squibb is 4.73 times less risky than Solid Biosciences. The stock trades about -0.01 of its potential returns per unit of risk. The Solid Biosciences LLC is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  570.00  in Solid Biosciences LLC on November 29, 2024 and sell it today you would lose (41.00) from holding Solid Biosciences LLC or give up 7.19% of portfolio value over 90 days.

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

Bristol Myers Squibb  vs.  Solid Biosciences LLC

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.

Solid Biosciences LLC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Solid Biosciences LLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental indicators, Solid Biosciences may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Bristol Myers and Solid Biosciences

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

The idea behind Bristol Myers Squibb and Solid Biosciences LLC 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.