Correlation Between Bristol Myers and AbbVie
Can any of the company-specific risk be diversified away by investing in both Bristol Myers and AbbVie 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 AbbVie 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 AbbVie Inc, you can compare the effects of market volatilities on Bristol Myers and AbbVie 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 AbbVie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol Myers and AbbVie.
Diversification Opportunities for Bristol Myers and AbbVie
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bristol and AbbVie is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and AbbVie Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AbbVie Inc 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 AbbVie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AbbVie Inc has no effect on the direction of Bristol Myers i.e., Bristol Myers and AbbVie go up and down completely randomly.
Pair Corralation between Bristol Myers and AbbVie
Considering the 90-day investment horizon Bristol Myers Squibb is expected to generate 0.89 times more return on investment than AbbVie. However, Bristol Myers Squibb is 1.13 times less risky than AbbVie. It trades about 0.21 of its potential returns per unit of risk. AbbVie Inc is currently generating about -0.07 per unit of risk. If you would invest 5,192 in Bristol Myers Squibb on August 26, 2024 and sell it today you would earn a total of 695.00 from holding Bristol Myers Squibb or generate 13.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bristol Myers Squibb vs. AbbVie Inc
Performance |
| Timeline |
| Bristol Myers Squibb |
| AbbVie Inc |
Bristol Myers and AbbVie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bristol Myers and AbbVie
The main advantage of trading using opposite Bristol Myers and AbbVie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol Myers position performs unexpectedly, AbbVie 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 AbbVie will offset losses from the drop in AbbVie's long position.| Bristol Myers vs. Capricor Therapeutics | Bristol Myers vs. Soleno Therapeutics | Bristol Myers vs. Bio Path Holdings | Bristol Myers vs. Moleculin Biotech |
| AbbVie vs. Eliem Therapeutics | AbbVie vs. HCW Biologics | AbbVie vs. Scpharmaceuticals | AbbVie vs. Milestone Pharmaceuticals |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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