Correlation Between Bristol Myers and FibroGen
Can any of the company-specific risk be diversified away by investing in both Bristol Myers and FibroGen 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 FibroGen 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 FibroGen, you can compare the effects of market volatilities on Bristol Myers and FibroGen 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 FibroGen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol Myers and FibroGen.
Diversification Opportunities for Bristol Myers and FibroGen
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bristol and FibroGen is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and FibroGen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FibroGen 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 FibroGen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FibroGen has no effect on the direction of Bristol Myers i.e., Bristol Myers and FibroGen go up and down completely randomly.
Pair Corralation between Bristol Myers and FibroGen
Assuming the 90 days trading horizon Bristol Myers Squibb is expected to generate 0.23 times more return on investment than FibroGen. However, Bristol Myers Squibb is 4.38 times less risky than FibroGen. It trades about 0.01 of its potential returns per unit of risk. FibroGen is currently generating about -0.04 per unit of risk. If you would invest 126,436 in Bristol Myers Squibb on September 1, 2024 and sell it today you would lose (4,236) from holding Bristol Myers Squibb or give up 3.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bristol Myers Squibb vs. FibroGen
Performance |
| Timeline |
| Bristol Myers Squibb |
| FibroGen |
Bristol Myers and FibroGen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bristol Myers and FibroGen
The main advantage of trading using opposite Bristol Myers and FibroGen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol Myers position performs unexpectedly, FibroGen 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 FibroGen will offset losses from the drop in FibroGen's long position.| Bristol Myers vs. Roche Holding AG | Bristol Myers vs. Amgen Inc | Bristol Myers vs. Gilead Sciences | Bristol Myers vs. Biogen Inc |
| FibroGen vs. Deutsche Bank Aktiengesellschaft | FibroGen vs. Genworth Financial | FibroGen vs. Verizon Communications | FibroGen vs. Grupo Sports World |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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