Correlation Between Bristol Myers and ATT
Can any of the company-specific risk be diversified away by investing in both Bristol Myers and ATT 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 ATT 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 ATT Inc, you can compare the effects of market volatilities on Bristol Myers and ATT 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 ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol Myers and ATT.
Diversification Opportunities for Bristol Myers and ATT
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bristol and ATT is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc 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 ATT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT Inc has no effect on the direction of Bristol Myers i.e., Bristol Myers and ATT go up and down completely randomly.
Pair Corralation between Bristol Myers and ATT
Assuming the 90 days horizon Bristol Myers is expected to generate 1.16 times less return on investment than ATT. In addition to that, Bristol Myers is 3.41 times more volatile than ATT Inc. It trades about 0.03 of its total potential returns per unit of risk. ATT Inc is currently generating about 0.13 per unit of volatility. If you would invest 1,437 in ATT Inc on September 24, 2024 and sell it today you would earn a total of 838.00 from holding ATT Inc or generate 58.32% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 70.79% |
Values | Daily Returns |
Bristol Myers Squibb vs. ATT Inc
Performance |
Timeline |
Bristol Myers Squibb |
ATT Inc |
Bristol Myers and ATT Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bristol Myers and ATT
The main advantage of trading using opposite Bristol Myers and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol Myers position performs unexpectedly, ATT 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 ATT will offset losses from the drop in ATT'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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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