Correlation Between FIBRA Storage and Bristol Myers

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

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

Diversification Opportunities for FIBRA Storage and Bristol Myers

0.33

Correlation Coefficient

FIBRA Storage  Bristol Myers

Weak diversification

The 3 months correlation between FIBRA and Bristol is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding FIBRA Storage 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 FIBRA Storage 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 FIBRA Storage 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 FIBRA Storage i.e., FIBRA Storage and Bristol Myers go up and down completely randomly.

Pair Corralation between FIBRA Storage and Bristol Myers

Assuming the 90 days trading horizon FIBRA Storage is expected to generate 0.82 times more return on investment than Bristol Myers. However, FIBRA Storage is 1.23 times less risky than Bristol Myers. It trades about 0.22 of its potential returns per unit of risk. Bristol Myers Squibb is currently generating about 0.06 per unit of risk. If you would invest  1,709  in FIBRA Storage on December 25, 2024 and sell it today you would earn a total of  321.00  from holding FIBRA Storage or generate 18.78% return on investment over 90 days.

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

FIBRA Storage  vs.  Bristol Myers Squibb

FIBRA Storage

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FIBRA Storage are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, FIBRA Storage exhibited solid returns over the last few months and may actually be approaching a breakup point.

Bristol Myers Squibb

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bristol Myers Squibb are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Bristol Myers is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with FIBRA Storage and Bristol Myers

The main advantage of trading using opposite FIBRA Storage and Bristol Myers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIBRA Storage 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 FIBRA Storage 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.