Correlation Between Bristol-Myers Squibb and Guerrilla

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

Diversification Opportunities for Bristol-Myers Squibb and Guerrilla

-0.78

Correlation Coefficient

Bristol-Myers Squibb  Guerrilla

Pay attention - limited upside

The 3 months correlation between Bristol-Myers and Guerrilla is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Guerrilla RF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guerrilla RF 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 Guerrilla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guerrilla RF has no effect on the direction of Bristol-Myers Squibb i.e., Bristol-Myers Squibb and Guerrilla go up and down completely randomly.

Pair Corralation between Bristol-Myers Squibb and Guerrilla

Assuming the 90 days horizon Bristol Myers Squibb is expected to generate 0.49 times more return on investment than Guerrilla. However, Bristol Myers Squibb is 2.03 times less risky than Guerrilla. It trades about 0.0 of its potential returns per unit of risk. Guerrilla RF is currently generating about -0.01 per unit of risk. If you would invest  117,420  in Bristol Myers Squibb on October 4, 2024 and sell it today you would lose (17,531) from holding Bristol Myers Squibb or give up 14.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	49.49%
Values	Daily Returns

Bristol Myers Squibb  vs.  Guerrilla RF

Bristol Myers Squibb

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bristol Myers Squibb are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile primary indicators, Bristol-Myers Squibb reported solid returns over the last few months and may actually be approaching a breakup point.

Guerrilla RF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guerrilla RF has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Bristol-Myers Squibb and Guerrilla

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

The idea behind Bristol Myers Squibb and Guerrilla RF 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.