Correlation Between Bristol Myers and Imperial Metals

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

Diversification Opportunities for Bristol Myers and Imperial Metals

-0.56

Correlation Coefficient

Bristol Myers  Imperial Metals

Excellent diversification

The 3 months correlation between Bristol and Imperial is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Imperial Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Metals 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 Imperial Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imperial Metals has no effect on the direction of Bristol Myers i.e., Bristol Myers and Imperial Metals go up and down completely randomly.

Pair Corralation between Bristol Myers and Imperial Metals

Assuming the 90 days horizon Bristol Myers is expected to generate 3.16 times less return on investment than Imperial Metals. In addition to that, Bristol Myers is 1.37 times more volatile than Imperial Metals. It trades about 0.0 of its total potential returns per unit of risk. Imperial Metals is currently generating about 0.02 per unit of volatility. If you would invest  132.00  in Imperial Metals on September 20, 2024 and sell it today you would earn a total of  4.00  from holding Imperial Metals or generate 3.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	47.47%
Values	Daily Returns

Bristol Myers Squibb  vs.  Imperial Metals

Bristol Myers Squibb

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bristol Myers Squibb are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile primary indicators, Bristol Myers reported solid returns over the last few months and may actually be approaching a breakup point.

Imperial Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Imperial Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Bristol Myers and Imperial Metals

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

The idea behind Bristol Myers Squibb and Imperial Metals 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 Stocks Directory module to find actively traded stocks across global markets.