Correlation Between Bristol Myers and Rinnai Corp

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

Diversification Opportunities for Bristol Myers and Rinnai Corp

0.0

Correlation Coefficient

Bristol Myers  Rinnai Corp

Pay attention - limited upside

The 3 months correlation between Bristol and Rinnai is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Rinnai Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rinnai Corp 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 Rinnai Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rinnai Corp has no effect on the direction of Bristol Myers i.e., Bristol Myers and Rinnai Corp go up and down completely randomly.

Pair Corralation between Bristol Myers and Rinnai Corp

If you would invest  95,555  in Bristol Myers Squibb on October 6, 2024 and sell it today you would earn a total of  4,334  from holding Bristol Myers Squibb or generate 4.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Bristol Myers Squibb  vs.  Rinnai Corp

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 reported solid returns over the last few months and may actually be approaching a breakup point.

Rinnai Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rinnai Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, Rinnai Corp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bristol Myers and Rinnai Corp

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

The idea behind Bristol Myers Squibb and Rinnai Corp 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.