Correlation Between Sanofi ADR and Bristol Myers

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

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

Diversification Opportunities for Sanofi ADR and Bristol Myers

-0.93

Correlation Coefficient

Sanofi ADR  Bristol Myers

Pay attention - limited upside

The 3 months correlation between Sanofi and Bristol is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding Sanofi ADR 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 Sanofi ADR 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 Sanofi ADR 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 Sanofi ADR i.e., Sanofi ADR and Bristol Myers go up and down completely randomly.

Pair Corralation between Sanofi ADR and Bristol Myers

Considering the 90-day investment horizon Sanofi ADR is expected to generate 0.7 times more return on investment than Bristol Myers. However, Sanofi ADR is 1.43 times less risky than Bristol Myers. It trades about -0.13 of its potential returns per unit of risk. Bristol Myers Squibb is currently generating about -0.16 per unit of risk. If you would invest  4,782  in Sanofi ADR on September 15, 2024 and sell it today you would lose (102.00) from holding Sanofi ADR or give up 2.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Sanofi ADR  vs.  Bristol Myers Squibb

Sanofi ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sanofi ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Bristol Myers Squibb

Risk-Adjusted Performance

9 of 100

Good

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

Pair Trading with Sanofi ADR and Bristol Myers

The main advantage of trading using opposite Sanofi ADR and Bristol Myers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sanofi ADR 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 Sanofi ADR 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 Commodity Directory module to find actively traded commodities issued by global exchanges.