Correlation Between Bristol Myers and Astellas Pharma
Can any of the company-specific risk be diversified away by investing in both Bristol Myers and Astellas Pharma 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 Astellas Pharma 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 Astellas Pharma, you can compare the effects of market volatilities on Bristol Myers and Astellas Pharma 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 Astellas Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol Myers and Astellas Pharma.
Diversification Opportunities for Bristol Myers and Astellas Pharma
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bristol and Astellas is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Astellas Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astellas Pharma 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 Astellas Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astellas Pharma has no effect on the direction of Bristol Myers i.e., Bristol Myers and Astellas Pharma go up and down completely randomly.
Pair Corralation between Bristol Myers and Astellas Pharma
Considering the 90-day investment horizon Bristol Myers Squibb is expected to generate 1.8 times more return on investment than Astellas Pharma. However, Bristol Myers is 1.8 times more volatile than Astellas Pharma. It trades about 0.2 of its potential returns per unit of risk. Astellas Pharma is currently generating about -0.49 per unit of risk. If you would invest 5,266 in Bristol Myers Squibb on August 31, 2024 and sell it today you would earn a total of 661.00 from holding Bristol Myers Squibb or generate 12.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bristol Myers Squibb vs. Astellas Pharma
Performance |
| Timeline |
| Bristol Myers Squibb |
| Astellas Pharma |
Bristol Myers and Astellas Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bristol Myers and Astellas Pharma
The main advantage of trading using opposite Bristol Myers and Astellas Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol Myers position performs unexpectedly, Astellas Pharma 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 Astellas Pharma will offset losses from the drop in Astellas Pharma's long position.| Bristol Myers vs. AbbVie Inc | Bristol Myers vs. Merck Company | Bristol Myers vs. Gilead Sciences | Bristol Myers vs. Johnson Johnson |
| Astellas Pharma vs. Bristol Myers Squibb | Astellas Pharma vs. Bayer AG | Astellas Pharma vs. Daiichi Sankyo | Astellas Pharma vs. AstraZeneca PLC |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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