Correlation Between Bristol-Myers Squibb and 1011778

Can any of the company-specific risk be diversified away by investing in both Bristol-Myers Squibb and 1011778 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 1011778 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 1011778 BC 3875, you can compare the effects of market volatilities on Bristol-Myers Squibb and 1011778 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 1011778. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol-Myers Squibb and 1011778.

Diversification Opportunities for Bristol-Myers Squibb and 1011778

-0.71

Correlation Coefficient

Bristol-Myers Squibb  1011778

Pay attention - limited upside

The 3 months correlation between Bristol-Myers and 1011778 is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and 1011778 BC 3875 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1011778 BC 3875 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 1011778. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1011778 BC 3875 has no effect on the direction of Bristol-Myers Squibb i.e., Bristol-Myers Squibb and 1011778 go up and down completely randomly.

Pair Corralation between Bristol-Myers Squibb and 1011778

Assuming the 90 days horizon Bristol Myers Squibb is expected to generate 11.77 times more return on investment than 1011778. However, Bristol-Myers Squibb is 11.77 times more volatile than 1011778 BC 3875. It trades about 0.12 of its potential returns per unit of risk. 1011778 BC 3875 is currently generating about -0.07 per unit of risk. If you would invest  80,055  in Bristol Myers Squibb on September 2, 2024 and sell it today you would earn a total of  20,500  from holding Bristol Myers Squibb or generate 25.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

Bristol Myers Squibb  vs.  1011778 BC 3875

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

1011778 BC 3875

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 1011778 BC 3875 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 1011778 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bristol-Myers Squibb and 1011778

The main advantage of trading using opposite Bristol-Myers Squibb and 1011778 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol-Myers Squibb position performs unexpectedly, 1011778 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 1011778 will offset losses from the drop in 1011778's long position.

The idea behind Bristol Myers Squibb and 1011778 BC 3875 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.