Correlation Between 90331HPL1 and Bristol Myers

Can any of the company-specific risk be diversified away by investing in both 90331HPL1 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 90331HPL1 and Bristol Myers into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between US BANK NATIONAL and Bristol Myers Squibb, you can compare the effects of market volatilities on 90331HPL1 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 90331HPL1 with a short position of Bristol Myers. Check out your portfolio center. Please also check ongoing floating volatility patterns of 90331HPL1 and Bristol Myers.

Diversification Opportunities for 90331HPL1 and Bristol Myers

0.0

Correlation Coefficient

90331HPL1  Bristol Myers

Pay attention - limited upside

The 3 months correlation between 90331HPL1 and Bristol is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding US BANK NATIONAL 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 90331HPL1 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 US BANK NATIONAL 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 90331HPL1 i.e., 90331HPL1 and Bristol Myers go up and down completely randomly.

Pair Corralation between 90331HPL1 and Bristol Myers

Assuming the 90 days trading horizon US BANK NATIONAL is expected to under-perform the Bristol Myers. But the bond apears to be less risky and, when comparing its historical volatility, US BANK NATIONAL is 1.25 times less risky than Bristol Myers. The bond trades about -0.52 of its potential returns per unit of risk. The Bristol Myers Squibb is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest  5,994  in Bristol Myers Squibb on October 1, 2024 and sell it today you would lose (226.00) from holding Bristol Myers Squibb or give up 3.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	38.1%
Values	Daily Returns

US BANK NATIONAL  vs.  Bristol Myers Squibb

US BANK NATIONAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US BANK NATIONAL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for US BANK NATIONAL investors.

Bristol Myers Squibb

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bristol Myers Squibb are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady primary indicators, Bristol Myers may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with 90331HPL1 and Bristol Myers

The main advantage of trading using opposite 90331HPL1 and Bristol Myers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 90331HPL1 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 US BANK NATIONAL 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.