Correlation Between Bristol Myers and Roche Holding

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Can any of the company-specific risk be diversified away by investing in both Bristol Myers and Roche Holding 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 Bristol Myers and Roche Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bristol Myers Squibb and Roche Holding, you can compare the effects of market volatilities on Bristol Myers and Roche Holding 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 Bristol Myers with a short position of Roche Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol Myers and Roche Holding.

Diversification Opportunities for Bristol Myers and Roche Holding

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Bristol and Roche is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bristol-Myers Squibb and Roche Holding Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roche Holding and Bristol Myers 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 Bristol Myers Squibb are associated (or correlated) with Roche Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roche Holding has no effect on the direction of Bristol Myers i.e., Bristol Myers and Roche Holding go up and down completely randomly.

Pair Corralation between Bristol Myers and Roche Holding

If you would invest (100.00) in Bristol Myers Squibb on December 29, 2023 and sell it today you would earn a total of  100.00  from holding Bristol Myers Squibb or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Bristol-Myers Squibb  vs.  Roche Holding Ltd

 Performance 
       Timeline  
Bristol-Myers Squibb 

Risk-Adjusted Performance

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Over the last 90 days Bristol Myers Squibb has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable primary indicators, Bristol Myers is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.
Roche Holding 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Roche Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Bristol Myers and Roche Holding Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bristol Myers and Roche Holding

The main advantage of trading using opposite Bristol Myers and Roche Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol Myers position performs unexpectedly, Roche Holding 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 Roche Holding will offset losses from the drop in Roche Holding's long position.
The idea behind Bristol Myers Squibb and Roche Holding 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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