Correlation Between Bristol Myers and SMS Co,
Can any of the company-specific risk be diversified away by investing in both Bristol Myers and SMS Co, 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 SMS Co, 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 SMS Co,, you can compare the effects of market volatilities on Bristol Myers and SMS Co, 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 SMS Co,. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol Myers and SMS Co,.
Diversification Opportunities for Bristol Myers and SMS Co,
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bristol and SMS is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and SMS Co, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMS Co, 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 SMS Co,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMS Co, has no effect on the direction of Bristol Myers i.e., Bristol Myers and SMS Co, go up and down completely randomly.
Pair Corralation between Bristol Myers and SMS Co,
Assuming the 90 days horizon Bristol Myers Squibb is expected to generate 1.18 times more return on investment than SMS Co,. However, Bristol Myers is 1.18 times more volatile than SMS Co,. It trades about 0.02 of its potential returns per unit of risk. SMS Co, is currently generating about -0.02 per unit of risk. If you would invest 97,340 in Bristol Myers Squibb on September 26, 2024 and sell it today you would earn a total of 2,549 from holding Bristol Myers Squibb or generate 2.62% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 67.95% |
Values | Daily Returns |
Bristol Myers Squibb vs. SMS Co,
Performance |
Timeline |
Bristol Myers Squibb |
SMS Co, |
Bristol Myers and SMS Co, Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bristol Myers and SMS Co,
The main advantage of trading using opposite Bristol Myers and SMS Co, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol Myers position performs unexpectedly, SMS Co, 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 SMS Co, will offset losses from the drop in SMS Co,'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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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