Correlation Between Bristol Myers and Legend Biotech
Can any of the company-specific risk be diversified away by investing in both Bristol Myers and Legend Biotech 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 Legend Biotech 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 Legend Biotech Corp, you can compare the effects of market volatilities on Bristol Myers and Legend Biotech 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 Legend Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol Myers and Legend Biotech.
Diversification Opportunities for Bristol Myers and Legend Biotech
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bristol and Legend is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Legend Biotech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legend Biotech Corp 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 Legend Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legend Biotech Corp has no effect on the direction of Bristol Myers i.e., Bristol Myers and Legend Biotech go up and down completely randomly.
Pair Corralation between Bristol Myers and Legend Biotech
Considering the 90-day investment horizon Bristol Myers Squibb is expected to generate 1.07 times more return on investment than Legend Biotech. However, Bristol Myers is 1.07 times more volatile than Legend Biotech Corp. It trades about 0.2 of its potential returns per unit of risk. Legend Biotech Corp is currently generating about -0.03 per unit of risk. If you would invest 5,266 in Bristol Myers Squibb on August 31, 2024 and sell it today you would earn a total of 661.00 from holding Bristol Myers Squibb or generate 12.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bristol Myers Squibb vs. Legend Biotech Corp
Performance |
| Timeline |
| Bristol Myers Squibb |
| Legend Biotech Corp |
Bristol Myers and Legend Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bristol Myers and Legend Biotech
The main advantage of trading using opposite Bristol Myers and Legend Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol Myers position performs unexpectedly, Legend Biotech 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 Legend Biotech will offset losses from the drop in Legend Biotech's long position.| Bristol Myers vs. AbbVie Inc | Bristol Myers vs. Merck Company | Bristol Myers vs. Gilead Sciences | Bristol Myers vs. Johnson Johnson |
| Legend Biotech vs. Vaxcyte | Legend Biotech vs. Apellis Pharmaceuticals | Legend Biotech vs. Travere Therapeutics | Legend Biotech vs. Akero Therapeutics |
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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