Correlation Between Bristol-Myers Squibb and Privia Health

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

Diversification Opportunities for Bristol-Myers Squibb and Privia Health

0.55

Correlation Coefficient

Bristol-Myers Squibb  Privia Health

Very weak diversification

The 3 months correlation between Bristol-Myers and Privia is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Privia Health Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Privia Health Group 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 Privia Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Privia Health Group has no effect on the direction of Bristol-Myers Squibb i.e., Bristol-Myers Squibb and Privia Health go up and down completely randomly.

Pair Corralation between Bristol-Myers Squibb and Privia Health

Assuming the 90 days horizon Bristol-Myers Squibb is expected to generate 1.16 times less return on investment than Privia Health. In addition to that, Bristol-Myers Squibb is 1.91 times more volatile than Privia Health Group. It trades about 0.05 of its total potential returns per unit of risk. Privia Health Group is currently generating about 0.11 per unit of volatility. If you would invest  2,016  in Privia Health Group on December 26, 2024 and sell it today you would earn a total of  259.00  from holding Privia Health Group or generate 12.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	60.0%
Values	Daily Returns

Bristol Myers Squibb  vs.  Privia Health Group

Bristol Myers Squibb

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bristol Myers Squibb are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile primary indicators, Bristol-Myers Squibb may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Privia Health Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Privia Health Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Privia Health sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bristol-Myers Squibb and Privia Health

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

The idea behind Bristol Myers Squibb and Privia Health Group 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.