Correlation Between Morgan Stanley and Bristol Myers
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley 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 Morgan Stanley and Bristol Myers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley and Bristol Myers Squibb, you can compare the effects of market volatilities on Morgan Stanley 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 Morgan Stanley with a short position of Bristol Myers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Bristol Myers.
Diversification Opportunities for Morgan Stanley and Bristol Myers
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Morgan and Bristol is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley 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 Morgan Stanley 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 Morgan Stanley 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 Morgan Stanley i.e., Morgan Stanley and Bristol Myers go up and down completely randomly.
Pair Corralation between Morgan Stanley and Bristol Myers
Assuming the 90 days trading horizon Morgan Stanley is expected to under-perform the Bristol Myers. In addition to that, Morgan Stanley is 1.13 times more volatile than Bristol Myers Squibb. It trades about 0.0 of its total potential returns per unit of risk. Bristol Myers Squibb is currently generating about 0.09 per unit of volatility. If you would invest 34,131 in Bristol Myers Squibb on September 25, 2024 and sell it today you would earn a total of 1,394 from holding Bristol Myers Squibb or generate 4.08% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Morgan Stanley vs. Bristol Myers Squibb
Performance |
Timeline |
Morgan Stanley |
Bristol Myers Squibb |
Morgan Stanley and Bristol Myers Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Morgan Stanley and Bristol Myers
The main advantage of trading using opposite Morgan Stanley and Bristol Myers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley 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.Morgan Stanley vs. The Charles Schwab | Morgan Stanley vs. The Goldman Sachs | Morgan Stanley vs. Banco BTG Pactual | Morgan Stanley vs. Nomura Holdings |
Bristol Myers vs. Waste Management | Bristol Myers vs. MAHLE Metal Leve | Bristol Myers vs. UnitedHealth Group Incorporated | Bristol Myers vs. Autohome |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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