Correlation Between Bristol Myers and Senti Biosciences

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

Diversification Opportunities for Bristol Myers and Senti Biosciences

0.11

Correlation Coefficient

Bristol Myers  Senti Biosciences

Average diversification

The 3 months correlation between Bristol and Senti is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Senti Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senti Biosciences 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 Senti Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senti Biosciences has no effect on the direction of Bristol Myers i.e., Bristol Myers and Senti Biosciences go up and down completely randomly.

Pair Corralation between Bristol Myers and Senti Biosciences

Considering the 90-day investment horizon Bristol Myers Squibb is expected to under-perform the Senti Biosciences. But the stock apears to be less risky and, when comparing its historical volatility, Bristol Myers Squibb is 33.28 times less risky than Senti Biosciences. The stock trades about -0.06 of its potential returns per unit of risk. The Senti Biosciences is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  212.00  in Senti Biosciences on November 20, 2024 and sell it today you would earn a total of  224.00  from holding Senti Biosciences or generate 105.66% 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.  Senti Biosciences

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.

Senti Biosciences

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Senti Biosciences are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Senti Biosciences demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bristol Myers and Senti Biosciences

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

The idea behind Bristol Myers Squibb and Senti Biosciences 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.