Correlation Between Bristol Myers and Solid Biosciences
Can any of the company-specific risk be diversified away by investing in both Bristol Myers and Solid Biosciences 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 Solid Biosciences 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 Solid Biosciences LLC, you can compare the effects of market volatilities on Bristol Myers and Solid Biosciences 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 Solid Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol Myers and Solid Biosciences.
Diversification Opportunities for Bristol Myers and Solid Biosciences
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bristol and Solid is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Solid Biosciences LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solid Biosciences LLC 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 Solid Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solid Biosciences LLC has no effect on the direction of Bristol Myers i.e., Bristol Myers and Solid Biosciences go up and down completely randomly.
Pair Corralation between Bristol Myers and Solid Biosciences
Considering the 90-day investment horizon Bristol Myers Squibb is expected to generate 0.63 times more return on investment than Solid Biosciences. However, Bristol Myers Squibb is 1.59 times less risky than Solid Biosciences. It trades about -0.35 of its potential returns per unit of risk. Solid Biosciences LLC is currently generating about -0.46 per unit of risk. If you would invest 5,238 in Bristol Myers Squibb on January 30, 2024 and sell it today you would lose (753.00) from holding Bristol Myers Squibb or give up 14.38% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Bristol Myers Squibb vs. Solid Biosciences LLC
Performance |
Timeline |
Bristol Myers Squibb |
Solid Biosciences LLC |
Bristol Myers and Solid Biosciences Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bristol Myers and Solid Biosciences
The main advantage of trading using opposite Bristol Myers and Solid Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol Myers position performs unexpectedly, Solid Biosciences 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 Solid Biosciences will offset losses from the drop in Solid Biosciences' long position.Bristol Myers vs. Amgen Inc | Bristol Myers vs. Fidelity Freedom Blend | Bristol Myers vs. Income Fund Of | Bristol Myers vs. HP Inc |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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