Correlation Between Bristol Myers and ICON PLC
Can any of the company-specific risk be diversified away by investing in both Bristol Myers and ICON 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 ICON 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 ICON PLC, you can compare the effects of market volatilities on Bristol Myers and ICON 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 ICON PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol Myers and ICON PLC.
Diversification Opportunities for Bristol Myers and ICON PLC
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bristol and ICON is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and ICON PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICON 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 ICON PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICON PLC has no effect on the direction of Bristol Myers i.e., Bristol Myers and ICON PLC go up and down completely randomly.
Pair Corralation between Bristol Myers and ICON PLC
Considering the 90-day investment horizon Bristol Myers Squibb is expected to under-perform the ICON PLC. But the stock apears to be less risky and, when comparing its historical volatility, Bristol Myers Squibb is 1.38 times less risky than ICON PLC. The stock trades about -0.02 of its potential returns per unit of risk. The ICON PLC is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 19,689 in ICON PLC on August 28, 2024 and sell it today you would earn a total of 1,987 from holding ICON PLC or generate 10.09% 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. ICON PLC
Performance |
| Timeline |
| Bristol Myers Squibb |
| ICON PLC |
Bristol Myers and ICON PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bristol Myers and ICON PLC
The main advantage of trading using opposite Bristol Myers and ICON PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol Myers position performs unexpectedly, ICON 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 ICON PLC will offset losses from the drop in ICON PLC's long position.| Bristol Myers vs. Capricor Therapeutics | Bristol Myers vs. Soleno Therapeutics | Bristol Myers vs. Bio Path Holdings | Bristol Myers vs. Moleculin Biotech |
| ICON PLC vs. Mettler Toledo International | ICON PLC vs. Charles River Laboratories | ICON PLC vs. Laboratory of | ICON PLC vs. IQVIA Holdings |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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