Correlation Between Bristol Myers and Ultragenyx

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

Diversification Opportunities for Bristol Myers and Ultragenyx

-0.88

Correlation Coefficient

Bristol Myers  Ultragenyx

Pay attention - limited upside

The 3 months correlation between Bristol and Ultragenyx is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Ultragenyx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultragenyx 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 Ultragenyx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultragenyx has no effect on the direction of Bristol Myers i.e., Bristol Myers and Ultragenyx go up and down completely randomly.

Pair Corralation between Bristol Myers and Ultragenyx

Considering the 90-day investment horizon Bristol Myers Squibb is expected to generate 1.19 times more return on investment than Ultragenyx. However, Bristol Myers is 1.19 times more volatile than Ultragenyx. It trades about 0.2 of its potential returns per unit of risk. Ultragenyx is currently generating about -0.15 per unit of risk. If you would invest  5,250  in Bristol Myers Squibb on August 30, 2024 and sell it today you would earn a total of  677.00  from holding Bristol Myers Squibb or generate 12.9% return on investment over 90 days.

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

Bristol Myers Squibb  vs.  Ultragenyx

Bristol Myers Squibb

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bristol Myers Squibb are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain primary indicators, Bristol Myers showed solid returns over the last few months and may actually be approaching a breakup point.

Ultragenyx

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ultragenyx has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Bristol Myers and Ultragenyx

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

The idea behind Bristol Myers Squibb and Ultragenyx 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.