Correlation Between Privia Health and Bristol Myers

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

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

Diversification Opportunities for Privia Health and Bristol Myers

0.71

Correlation Coefficient

Privia Health  Bristol Myers

Poor diversification

The 3 months correlation between Privia and Bristol is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Privia Health Group 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 Privia Health 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 Privia Health Group 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 Privia Health i.e., Privia Health and Bristol Myers go up and down completely randomly.

Pair Corralation between Privia Health and Bristol Myers

Given the investment horizon of 90 days Privia Health Group is expected to generate 0.68 times more return on investment than Bristol Myers. However, Privia Health Group is 1.47 times less risky than Bristol Myers. It trades about 0.0 of its potential returns per unit of risk. Bristol Myers Squibb is currently generating about 0.0 per unit of risk. If you would invest  2,554  in Privia Health Group on October 12, 2024 and sell it today you would lose (503.00) from holding Privia Health Group or give up 19.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	50.71%
Values	Daily Returns

Privia Health Group  vs.  Bristol Myers Squibb

Privia Health Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Privia Health Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Privia Health sustained solid returns over the last few months and may actually be approaching a breakup point.

Bristol Myers Squibb

Risk-Adjusted Performance

2 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bristol Myers Squibb are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile primary indicators, Bristol Myers may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Privia Health and Bristol Myers

The main advantage of trading using opposite Privia Health and Bristol Myers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Privia Health 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 Privia Health Group 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.

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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.