Correlation Between Bristol Myers and Elanco Animal
Can any of the company-specific risk be diversified away by investing in both Bristol Myers and Elanco Animal 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 Elanco Animal 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 Elanco Animal Health, you can compare the effects of market volatilities on Bristol Myers and Elanco Animal 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 Elanco Animal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol Myers and Elanco Animal.
Diversification Opportunities for Bristol Myers and Elanco Animal
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bristol and Elanco is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Elanco Animal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elanco Animal Health 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 Elanco Animal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elanco Animal Health has no effect on the direction of Bristol Myers i.e., Bristol Myers and Elanco Animal go up and down completely randomly.
Pair Corralation between Bristol Myers and Elanco Animal
Considering the 90-day investment horizon Bristol Myers Squibb is expected to generate 0.97 times more return on investment than Elanco Animal. However, Bristol Myers Squibb is 1.03 times less risky than Elanco Animal. It trades about 0.15 of its potential returns per unit of risk. Elanco Animal Health is currently generating about 0.11 per unit of risk. If you would invest 5,306 in Bristol Myers Squibb on August 24, 2024 and sell it today you would earn a total of 517.00 from holding Bristol Myers Squibb or generate 9.74% 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. Elanco Animal Health
Performance |
| Timeline |
| Bristol Myers Squibb |
| Elanco Animal Health |
Bristol Myers and Elanco Animal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bristol Myers and Elanco Animal
The main advantage of trading using opposite Bristol Myers and Elanco Animal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol Myers position performs unexpectedly, Elanco Animal 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 Elanco Animal will offset losses from the drop in Elanco Animal's long position.| Bristol Myers vs. Merck Company | Bristol Myers vs. Pfizer Inc | Bristol Myers vs. Eshallgo Class A | Bristol Myers vs. Amtech Systems |
| Elanco Animal vs. Viatris | Elanco Animal vs. Catalent | Elanco Animal vs. Lantheus Holdings | Elanco Animal vs. Haleon 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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