Correlation Between Bristol Myers and LMF Acquisition
Can any of the company-specific risk be diversified away by investing in both Bristol Myers and LMF Acquisition 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 LMF Acquisition 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 LMF Acquisition Opportunities, you can compare the effects of market volatilities on Bristol Myers and LMF Acquisition 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 LMF Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol Myers and LMF Acquisition.
Diversification Opportunities for Bristol Myers and LMF Acquisition
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bristol and LMF is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and LMF Acquisition Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LMF Acquisition Oppo 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 LMF Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LMF Acquisition Oppo has no effect on the direction of Bristol Myers i.e., Bristol Myers and LMF Acquisition go up and down completely randomly.
Pair Corralation between Bristol Myers and LMF Acquisition
Considering the 90-day investment horizon Bristol Myers Squibb is expected to generate 0.21 times more return on investment than LMF Acquisition. However, Bristol Myers Squibb is 4.66 times less risky than LMF Acquisition. It trades about 0.04 of its potential returns per unit of risk. LMF Acquisition Opportunities is currently generating about -0.1 per unit of risk. If you would invest 5,895 in Bristol Myers Squibb on December 2, 2024 and sell it today you would earn a total of 67.00 from holding Bristol Myers Squibb or generate 1.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bristol Myers Squibb vs. LMF Acquisition Opportunities
Performance |
| Timeline |
| Bristol Myers Squibb |
| LMF Acquisition Oppo |
Bristol Myers and LMF Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bristol Myers and LMF Acquisition
The main advantage of trading using opposite Bristol Myers and LMF Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol Myers position performs unexpectedly, LMF Acquisition 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 LMF Acquisition will offset losses from the drop in LMF Acquisition's long position.| Bristol Myers vs. AbbVie Inc | ||
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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