Correlation Between Bristol Myers and Wienerberger

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

Diversification Opportunities for Bristol Myers and Wienerberger

-0.32

Correlation Coefficient

Bristol Myers  Wienerberger

Very good diversification

The 3 months correlation between Bristol and Wienerberger is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Wienerberger AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wienerberger AG 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 Wienerberger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wienerberger AG has no effect on the direction of Bristol Myers i.e., Bristol Myers and Wienerberger go up and down completely randomly.

Pair Corralation between Bristol Myers and Wienerberger

Considering the 90-day investment horizon Bristol Myers Squibb is expected to under-perform the Wienerberger. In addition to that, Bristol Myers is 1.1 times more volatile than Wienerberger AG. It trades about -0.01 of its total potential returns per unit of risk. Wienerberger AG is currently generating about 0.03 per unit of volatility. If you would invest  2,877  in Wienerberger AG on September 26, 2024 and sell it today you would earn a total of  371.00  from holding Wienerberger AG or generate 12.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	64.52%
Values	Daily Returns

Bristol Myers Squibb  vs.  Wienerberger AG

Bristol Myers Squibb

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bristol Myers Squibb are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady primary indicators, Bristol Myers showed solid returns over the last few months and may actually be approaching a breakup point.

Wienerberger AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wienerberger AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Wienerberger is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Bristol Myers and Wienerberger

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

The idea behind Bristol Myers Squibb and Wienerberger AG 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.

Check out your portfolio center.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.