Correlation Between Aurora Innovation and Bristol-Myers Squibb
Can any of the company-specific risk be diversified away by investing in both Aurora Innovation and Bristol-Myers Squibb 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 Aurora Innovation and Bristol-Myers Squibb into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurora Innovation and Bristol Myers Squibb, you can compare the effects of market volatilities on Aurora Innovation and Bristol-Myers Squibb 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 Aurora Innovation with a short position of Bristol-Myers Squibb. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Innovation and Bristol-Myers Squibb.
Diversification Opportunities for Aurora Innovation and Bristol-Myers Squibb
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Aurora and Bristol-Myers is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Innovation 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 Aurora Innovation 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 Aurora Innovation are associated (or correlated) with Bristol-Myers Squibb. 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 Aurora Innovation i.e., Aurora Innovation and Bristol-Myers Squibb go up and down completely randomly.
Pair Corralation between Aurora Innovation and Bristol-Myers Squibb
Considering the 90-day investment horizon Aurora Innovation is expected to generate 3.72 times less return on investment than Bristol-Myers Squibb. In addition to that, Aurora Innovation is 1.98 times more volatile than Bristol Myers Squibb. It trades about 0.03 of its total potential returns per unit of risk. Bristol Myers Squibb is currently generating about 0.22 per unit of volatility. If you would invest 84,500 in Bristol Myers Squibb on August 31, 2024 and sell it today you would earn a total of 16,055 from holding Bristol Myers Squibb or generate 19.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Aurora Innovation vs. Bristol Myers Squibb
Performance |
| Timeline |
| Aurora Innovation |
| Bristol Myers Squibb |
Aurora Innovation and Bristol-Myers Squibb Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurora Innovation and Bristol-Myers Squibb
The main advantage of trading using opposite Aurora Innovation and Bristol-Myers Squibb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Innovation position performs unexpectedly, Bristol-Myers Squibb 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 Squibb will offset losses from the drop in Bristol-Myers Squibb's long position.| Aurora Innovation vs. RLJ Lodging Trust | Aurora Innovation vs. Aquagold International | Aurora Innovation vs. Stepstone Group | Aurora Innovation vs. Morningstar Unconstrained Allocation |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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