Correlation Between Qwest Corp and Bristol Myers

Can any of the company-specific risk be diversified away by investing in both Qwest Corp and Bristol Myers 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 Qwest Corp and Bristol Myers into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Qwest Corp NT and Bristol Myers Squibb, you can compare the effects of market volatilities on Qwest Corp and Bristol Myers 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 Qwest Corp with a short position of Bristol Myers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qwest Corp and Bristol Myers.

Diversification Opportunities for Qwest Corp and Bristol Myers

0.69

Correlation Coefficient

Qwest Corp  Bristol Myers

Poor diversification

The 3 months correlation between Qwest and Bristol is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Qwest Corp NT and Bristol Myers Squibb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bristol Myers Squibb and Qwest Corp 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 Qwest Corp NT are associated (or correlated) with Bristol Myers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bristol Myers Squibb has no effect on the direction of Qwest Corp i.e., Qwest Corp and Bristol Myers go up and down completely randomly.

Pair Corralation between Qwest Corp and Bristol Myers

Given the investment horizon of 90 days Qwest Corp NT is expected to generate 0.72 times more return on investment than Bristol Myers. However, Qwest Corp NT is 1.39 times less risky than Bristol Myers. It trades about 0.19 of its potential returns per unit of risk. Bristol Myers Squibb is currently generating about 0.03 per unit of risk. If you would invest  964.00  in Qwest Corp NT on October 22, 2024 and sell it today you would earn a total of  786.00  from holding Qwest Corp NT or generate 81.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Qwest Corp NT  vs.  Bristol Myers Squibb

Qwest Corp NT

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Qwest Corp NT are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Qwest Corp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Bristol Myers Squibb

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bristol Myers Squibb are ranked lower than 5 (%) 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.

Pair Trading with Qwest Corp and Bristol Myers

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

The idea behind Qwest Corp NT and Bristol Myers Squibb 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.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.