Correlation Between Bristol Myers and Biogen
Can any of the company-specific risk be diversified away by investing in both Bristol Myers and Biogen 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 Biogen 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 Biogen Inc, you can compare the effects of market volatilities on Bristol Myers and Biogen 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 Biogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol Myers and Biogen.
Diversification Opportunities for Bristol Myers and Biogen
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bristol and Biogen is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Biogen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biogen 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 Biogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biogen Inc has no effect on the direction of Bristol Myers i.e., Bristol Myers and Biogen go up and down completely randomly.
Pair Corralation between Bristol Myers and Biogen
Considering the 90-day investment horizon Bristol Myers Squibb is expected to generate 0.84 times more return on investment than Biogen. However, Bristol Myers Squibb is 1.2 times less risky than Biogen. It trades about 0.19 of its potential returns per unit of risk. Biogen Inc is currently generating about -0.12 per unit of risk. If you would invest 5,617 in Bristol Myers Squibb on November 3, 2024 and sell it today you would earn a total of 278.00 from holding Bristol Myers Squibb or generate 4.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Bristol Myers Squibb vs. Biogen Inc
Performance |
| Timeline |
| Bristol Myers Squibb |
| Biogen Inc |
Bristol Myers and Biogen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bristol Myers and Biogen
The main advantage of trading using opposite Bristol Myers and Biogen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol Myers position performs unexpectedly, Biogen 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 Biogen will offset losses from the drop in Biogen's long position.| Bristol Myers vs. AbbVie Inc | Bristol Myers vs. Merck Company | Bristol Myers vs. Gilead Sciences | Bristol Myers vs. Johnson Johnson |
| Biogen vs. Bristol Myers Squibb | Biogen vs. AbbVie Inc | Biogen vs. Merck Company | Biogen vs. Gilead Sciences |
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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