Correlation Between Bristol Myers and Nextgen Food
Can any of the company-specific risk be diversified away by investing in both Bristol Myers and Nextgen Food 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 Nextgen Food 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 Nextgen Food Robotics, you can compare the effects of market volatilities on Bristol Myers and Nextgen Food 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 Nextgen Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol Myers and Nextgen Food.
Diversification Opportunities for Bristol Myers and Nextgen Food
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bristol and Nextgen is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Nextgen Food Robotics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextgen Food Robotics 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 Nextgen Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextgen Food Robotics has no effect on the direction of Bristol Myers i.e., Bristol Myers and Nextgen Food go up and down completely randomly.
Pair Corralation between Bristol Myers and Nextgen Food
Assuming the 90 days horizon Bristol Myers is expected to generate 10.31 times less return on investment than Nextgen Food. But when comparing it to its historical volatility, Bristol Myers Squibb is 10.57 times less risky than Nextgen Food. It trades about 0.12 of its potential returns per unit of risk. Nextgen Food Robotics is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 4.00 in Nextgen Food Robotics on October 10, 2024 and sell it today you would earn a total of 0.50 from holding Nextgen Food Robotics or generate 12.5% 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. Nextgen Food Robotics
Performance |
Timeline |
Bristol Myers Squibb |
Nextgen Food Robotics |
Bristol Myers and Nextgen Food Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bristol Myers and Nextgen Food
The main advantage of trading using opposite Bristol Myers and Nextgen Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol Myers position performs unexpectedly, Nextgen Food 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 Nextgen Food will offset losses from the drop in Nextgen Food's long position.Bristol Myers vs. Novartis AG | Bristol Myers vs. Bayer AG | Bristol Myers vs. Astellas Pharma | Bristol Myers vs. Roche Holding AG |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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