Correlation Between Bristol-Myers Squibb and Moog

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

Diversification Opportunities for Bristol-Myers Squibb and Moog

0.74

Correlation Coefficient

Bristol-Myers Squibb  Moog

Poor diversification

The 3 months correlation between Bristol-Myers and Moog is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Moog Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moog Inc 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 Moog. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moog Inc has no effect on the direction of Bristol-Myers Squibb i.e., Bristol-Myers Squibb and Moog go up and down completely randomly.

Pair Corralation between Bristol-Myers Squibb and Moog

Assuming the 90 days horizon Bristol Myers Squibb is expected to generate 1.56 times more return on investment than Moog. However, Bristol-Myers Squibb is 1.56 times more volatile than Moog Inc. It trades about 0.12 of its potential returns per unit of risk. Moog Inc is currently generating about 0.08 per unit of risk. If you would invest  80,055  in Bristol Myers Squibb on September 2, 2024 and sell it today you would earn a total of  20,500  from holding Bristol Myers Squibb or generate 25.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Bristol Myers Squibb  vs.  Moog Inc

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.

Moog Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Moog Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Moog may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bristol-Myers Squibb and Moog

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

The idea behind Bristol Myers Squibb and Moog Inc 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.