Correlation Between Bristol Myers and Mersana Therapeutics

Can any of the company-specific risk be diversified away by investing in both Bristol Myers and Mersana Therapeutics 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 Mersana Therapeutics 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 Mersana Therapeutics, you can compare the effects of market volatilities on Bristol Myers and Mersana Therapeutics 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 Mersana Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol Myers and Mersana Therapeutics.

Diversification Opportunities for Bristol Myers and Mersana Therapeutics

0.52

Correlation Coefficient

Bristol Myers  Mersana Therapeutics

Very weak diversification

The 3 months correlation between Bristol and Mersana is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Mersana Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mersana Therapeutics 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 Mersana Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mersana Therapeutics has no effect on the direction of Bristol Myers i.e., Bristol Myers and Mersana Therapeutics go up and down completely randomly.

Pair Corralation between Bristol Myers and Mersana Therapeutics

Considering the 90-day investment horizon Bristol Myers Squibb is expected to under-perform the Mersana Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Bristol Myers Squibb is 3.6 times less risky than Mersana Therapeutics. The stock trades about -0.01 of its potential returns per unit of risk. The Mersana Therapeutics is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  811.00  in Mersana Therapeutics on May 7, 2025 and sell it today you would lose (107.00) from holding Mersana Therapeutics or give up 13.19% of portfolio value over 90 days.

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

Bristol Myers Squibb  vs.  Mersana Therapeutics

Bristol Myers Squibb

Risk-Adjusted Performance

Weakest

Over the last 90 days Bristol Myers Squibb has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, Bristol Myers is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Mersana Therapeutics

Risk-Adjusted Performance

Weakest

Over the last 90 days Mersana Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Mersana Therapeutics is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Bristol Myers and Mersana Therapeutics

The main advantage of trading using opposite Bristol Myers and Mersana Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol Myers position performs unexpectedly, Mersana Therapeutics 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 Mersana Therapeutics will offset losses from the drop in Mersana Therapeutics' long position.

The idea behind Bristol Myers Squibb and Mersana Therapeutics 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.