Correlation Between Apple and Bristol Myers
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and Bristol Myers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Bristol Myers Squibb, you can compare the effects of market volatilities on Apple 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 Apple with a short position of Bristol Myers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Bristol Myers.
Diversification Opportunities for Apple and Bristol Myers
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Apple and Bristol is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc 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 Apple 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 Apple Inc 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 Apple i.e., Apple and Bristol Myers go up and down completely randomly.
Pair Corralation between Apple and Bristol Myers
Given the investment horizon of 90 days Apple Inc is expected to generate 0.33 times more return on investment than Bristol Myers. However, Apple Inc is 3.06 times less risky than Bristol Myers. It trades about 0.1 of its potential returns per unit of risk. Bristol Myers Squibb is currently generating about 0.0 per unit of risk. If you would invest 12,868 in Apple Inc on September 16, 2024 and sell it today you would earn a total of 11,945 from holding Apple Inc or generate 92.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 46.98% |
| Values | Daily Returns |
Apple Inc vs. Bristol Myers Squibb
Performance |
| Timeline |
| Apple Inc |
| Bristol Myers Squibb |
Apple and Bristol Myers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Bristol Myers
The main advantage of trading using opposite Apple and Bristol Myers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.| Apple vs. Rigetti Computing | Apple vs. D Wave Quantum | Apple vs. Desktop Metal | Apple vs. Quantum Computing |
| Bristol Myers vs. Novartis AG | Bristol Myers vs. Bayer AG | Bristol Myers vs. Astellas Pharma | Bristol Myers vs. Roche Holding AG |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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