Correlation Between Bristol-Myers Squibb and American Copper
Can any of the company-specific risk be diversified away by investing in both Bristol-Myers Squibb and American Copper 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 Squibb and American Copper 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 American Copper Development, you can compare the effects of market volatilities on Bristol-Myers Squibb and American Copper 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 Squibb with a short position of American Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol-Myers Squibb and American Copper.
Diversification Opportunities for Bristol-Myers Squibb and American Copper
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bristol-Myers and American is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and American Copper Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Copper Deve and Bristol-Myers Squibb 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 American Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Copper Deve has no effect on the direction of Bristol-Myers Squibb i.e., Bristol-Myers Squibb and American Copper go up and down completely randomly.
Pair Corralation between Bristol-Myers Squibb and American Copper
Assuming the 90 days horizon Bristol-Myers Squibb is expected to generate 5.37 times less return on investment than American Copper. But when comparing it to its historical volatility, Bristol Myers Squibb is 4.11 times less risky than American Copper. It trades about 0.14 of its potential returns per unit of risk. American Copper Development is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2.01 in American Copper Development on September 4, 2024 and sell it today you would earn a total of 0.99 from holding American Copper Development or generate 49.25% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 95.24% |
Values | Daily Returns |
Bristol Myers Squibb vs. American Copper Development
Performance |
Timeline |
Bristol Myers Squibb |
American Copper Deve |
Bristol-Myers Squibb and American Copper Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bristol-Myers Squibb and American Copper
The main advantage of trading using opposite Bristol-Myers Squibb and American Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol-Myers Squibb position performs unexpectedly, American Copper 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 American Copper will offset losses from the drop in American Copper's long position.Bristol-Myers Squibb vs. Novartis AG | Bristol-Myers Squibb vs. Bayer AG | Bristol-Myers Squibb vs. Astellas Pharma | Bristol-Myers Squibb vs. Roche Holding AG |
American Copper vs. NI Holdings | American Copper vs. Aspen Insurance Holdings | American Copper vs. Cardinal Health | American Copper vs. Siriuspoint |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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