Correlation Between Bristol Myers and Clave Indices

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

Diversification Opportunities for Bristol Myers and Clave Indices

-0.66

Correlation Coefficient

Bristol Myers  Clave Indices

Excellent diversification

The 3 months correlation between Bristol and Clave is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Clave Indices De in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clave Indices De 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 Clave Indices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clave Indices De has no effect on the direction of Bristol Myers i.e., Bristol Myers and Clave Indices go up and down completely randomly.

Pair Corralation between Bristol Myers and Clave Indices

Assuming the 90 days trading horizon Bristol Myers Squibb is expected to generate 2.18 times more return on investment than Clave Indices. However, Bristol Myers is 2.18 times more volatile than Clave Indices De. It trades about 0.03 of its potential returns per unit of risk. Clave Indices De is currently generating about -0.02 per unit of risk. If you would invest  31,000  in Bristol Myers Squibb on October 4, 2024 and sell it today you would earn a total of  4,592  from holding Bristol Myers Squibb or generate 14.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.41%
Values	Daily Returns

Bristol Myers Squibb  vs.  Clave Indices De

Bristol Myers Squibb

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bristol Myers Squibb are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bristol Myers sustained solid returns over the last few months and may actually be approaching a breakup point.

Clave Indices De

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clave Indices De has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Bristol Myers and Clave Indices

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

The idea behind Bristol Myers Squibb and Clave Indices De 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.