Correlation Between Barnes and Bristol-Myers Squibb
Can any of the company-specific risk be diversified away by investing in both Barnes 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 Barnes 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 Barnes Group and Bristol Myers Squibb, you can compare the effects of market volatilities on Barnes 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 Barnes with a short position of Bristol-Myers Squibb. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barnes and Bristol-Myers Squibb.
Diversification Opportunities for Barnes and Bristol-Myers Squibb
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barnes and Bristol-Myers is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Group 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 Barnes 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 Barnes Group 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 Barnes i.e., Barnes and Bristol-Myers Squibb go up and down completely randomly.
Pair Corralation between Barnes and Bristol-Myers Squibb
Taking into account the 90-day investment horizon Barnes Group is expected to generate 0.55 times more return on investment than Bristol-Myers Squibb. However, Barnes Group is 1.83 times less risky than Bristol-Myers Squibb. It trades about 0.11 of its potential returns per unit of risk. Bristol Myers Squibb is currently generating about 0.04 per unit of risk. If you would invest 2,799 in Barnes Group on September 2, 2024 and sell it today you would earn a total of 1,885 from holding Barnes Group or generate 67.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 75.4% |
| Values | Daily Returns |
Barnes Group vs. Bristol Myers Squibb
Performance |
| Timeline |
| Barnes Group |
| Bristol Myers Squibb |
Barnes and Bristol-Myers Squibb Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barnes and Bristol-Myers Squibb
The main advantage of trading using opposite Barnes and Bristol-Myers Squibb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnes 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.| Barnes vs. Helios Technologies | Barnes vs. Enpro Industries | Barnes vs. Omega Flex | Barnes vs. Luxfer Holdings PLC |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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