Correlation Between Bristol Myers and AstraZeneca PLC
Can any of the company-specific risk be diversified away by investing in both Bristol Myers and AstraZeneca PLC 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 AstraZeneca PLC 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 AstraZeneca PLC, you can compare the effects of market volatilities on Bristol Myers and AstraZeneca PLC 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 AstraZeneca PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol Myers and AstraZeneca PLC.
Diversification Opportunities for Bristol Myers and AstraZeneca PLC
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bristol and AstraZeneca is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and AstraZeneca PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AstraZeneca PLC 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 AstraZeneca PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AstraZeneca PLC has no effect on the direction of Bristol Myers i.e., Bristol Myers and AstraZeneca PLC go up and down completely randomly.
Pair Corralation between Bristol Myers and AstraZeneca PLC
Considering the 90-day investment horizon Bristol Myers Squibb is expected to under-perform the AstraZeneca PLC. But the stock apears to be less risky and, when comparing its historical volatility, Bristol Myers Squibb is 1.34 times less risky than AstraZeneca PLC. The stock trades about -0.02 of its potential returns per unit of risk. The AstraZeneca PLC is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 13,364 in AstraZeneca PLC on August 30, 2024 and sell it today you would earn a total of 106.00 from holding AstraZeneca PLC or generate 0.79% 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. AstraZeneca PLC
Performance |
| Timeline |
| Bristol Myers Squibb |
| AstraZeneca PLC |
Bristol Myers and AstraZeneca PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bristol Myers and AstraZeneca PLC
The main advantage of trading using opposite Bristol Myers and AstraZeneca PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol Myers position performs unexpectedly, AstraZeneca PLC 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 AstraZeneca PLC will offset losses from the drop in AstraZeneca PLC's long position.| Bristol Myers vs. Emergent Biosolutions | Bristol Myers vs. Bausch Health Companies | Bristol Myers vs. Neurocrine Biosciences | Bristol Myers vs. Teva Pharma Industries |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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