Correlation Between Bristol Myers and Akebia Ther
Can any of the company-specific risk be diversified away by investing in both Bristol Myers and Akebia Ther 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 Akebia Ther 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 Akebia Ther, you can compare the effects of market volatilities on Bristol Myers and Akebia Ther 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 Akebia Ther. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol Myers and Akebia Ther.
Diversification Opportunities for Bristol Myers and Akebia Ther
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bristol and Akebia is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Akebia Ther in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akebia Ther 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 Akebia Ther. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akebia Ther has no effect on the direction of Bristol Myers i.e., Bristol Myers and Akebia Ther go up and down completely randomly.
Pair Corralation between Bristol Myers and Akebia Ther
Considering the 90-day investment horizon Bristol Myers is expected to generate 15.41 times less return on investment than Akebia Ther. But when comparing it to its historical volatility, Bristol Myers Squibb is 2.58 times less risky than Akebia Ther. It trades about 0.04 of its potential returns per unit of risk. Akebia Ther is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 179.00 in Akebia Ther on November 9, 2024 and sell it today you would earn a total of 37.00 from holding Akebia Ther or generate 20.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bristol Myers Squibb vs. Akebia Ther
Performance |
| Timeline |
| Bristol Myers Squibb |
| Akebia Ther |
Bristol Myers and Akebia Ther Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bristol Myers and Akebia Ther
The main advantage of trading using opposite Bristol Myers and Akebia Ther positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol Myers position performs unexpectedly, Akebia Ther 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 Akebia Ther will offset losses from the drop in Akebia Ther's long position.| Bristol Myers vs. AbbVie Inc | Bristol Myers vs. Merck Company | Bristol Myers vs. Gilead Sciences | Bristol Myers vs. Johnson Johnson |
| Akebia Ther vs. Protalix Biotherapeutics | Akebia Ther vs. Cidara Therapeutics | Akebia Ther vs. X4 Pharmaceuticals | Akebia Ther vs. Seres Therapeutics |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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