Correlation Between Bristol Myers and SPDR Series
Can any of the company-specific risk be diversified away by investing in both Bristol Myers and SPDR Series 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 SPDR Series 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 SPDR Series Trust, you can compare the effects of market volatilities on Bristol Myers and SPDR Series 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 SPDR Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol Myers and SPDR Series.
Diversification Opportunities for Bristol Myers and SPDR Series
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bristol and SPDR is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and SPDR Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Series Trust 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 SPDR Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Series Trust has no effect on the direction of Bristol Myers i.e., Bristol Myers and SPDR Series go up and down completely randomly.
Pair Corralation between Bristol Myers and SPDR Series
Assuming the 90 days trading horizon Bristol Myers is expected to generate 1.3 times less return on investment than SPDR Series. In addition to that, Bristol Myers is 1.68 times more volatile than SPDR Series Trust. It trades about 0.17 of its total potential returns per unit of risk. SPDR Series Trust is currently generating about 0.37 per unit of volatility. If you would invest 262,000 in SPDR Series Trust on September 2, 2024 and sell it today you would earn a total of 39,100 from holding SPDR Series Trust or generate 14.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bristol Myers Squibb vs. SPDR Series Trust
Performance |
| Timeline |
| Bristol Myers Squibb |
| SPDR Series Trust |
Bristol Myers and SPDR Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bristol Myers and SPDR Series
The main advantage of trading using opposite Bristol Myers and SPDR Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol Myers position performs unexpectedly, SPDR Series 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 SPDR Series will offset losses from the drop in SPDR Series' long position.| Bristol Myers vs. Verizon Communications | Bristol Myers vs. First Republic Bank | Bristol Myers vs. UnitedHealth Group Incorporated | Bristol Myers vs. Prudential Financial |
| SPDR Series vs. SPDR Dow Jones | SPDR Series vs. SPDR Gold Trust | SPDR Series vs. SPDR SP 500 | SPDR Series vs. SPDR SP Regional |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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