Correlation Between Boeing and Bristol Myers
Can any of the company-specific risk be diversified away by investing in both Boeing 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 Boeing and Bristol Myers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boeing and Bristol Myers Squibb, you can compare the effects of market volatilities on Boeing 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 Boeing with a short position of Bristol Myers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and Bristol Myers.
Diversification Opportunities for Boeing and Bristol Myers
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Boeing and Bristol is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing 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 Boeing 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 The Boeing 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 Boeing i.e., Boeing and Bristol Myers go up and down completely randomly.
Pair Corralation between Boeing and Bristol Myers
Allowing for the 90-day total investment horizon The Boeing is expected to under-perform the Bristol Myers. But the stock apears to be less risky and, when comparing its historical volatility, The Boeing is 2.1 times less risky than Bristol Myers. The stock trades about -0.22 of its potential returns per unit of risk. The Bristol Myers Squibb is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 84,500 in Bristol Myers Squibb on August 23, 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 Against |
| Strength | Very Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
The Boeing vs. Bristol Myers Squibb
Performance |
| Timeline |
| Boeing |
| Bristol Myers Squibb |
Boeing and Bristol Myers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boeing and Bristol Myers
The main advantage of trading using opposite Boeing and Bristol Myers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing 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.| Boeing vs. Small Cap Core | Boeing vs. Freedom Holding Corp | Boeing vs. Gfl Environmental Holdings | Boeing vs. Growth Fund Of |
| 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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