Correlation Between Bristol Myers and Lipella Pharmaceuticals

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Can any of the company-specific risk be diversified away by investing in both Bristol Myers and Lipella Pharmaceuticals 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 Lipella Pharmaceuticals 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 Lipella Pharmaceuticals Common, you can compare the effects of market volatilities on Bristol Myers and Lipella Pharmaceuticals 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 Lipella Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol Myers and Lipella Pharmaceuticals.

Diversification Opportunities for Bristol Myers and Lipella Pharmaceuticals

-0.46
  Correlation Coefficient

Very good diversification

The 3 months correlation between Bristol and Lipella is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Lipella Pharmaceuticals Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipella Pharmaceuticals 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 Lipella Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lipella Pharmaceuticals has no effect on the direction of Bristol Myers i.e., Bristol Myers and Lipella Pharmaceuticals go up and down completely randomly.

Pair Corralation between Bristol Myers and Lipella Pharmaceuticals

Considering the 90-day investment horizon Bristol Myers is expected to generate 45.5 times less return on investment than Lipella Pharmaceuticals. But when comparing it to its historical volatility, Bristol Myers Squibb is 11.05 times less risky than Lipella Pharmaceuticals. It trades about 0.04 of its potential returns per unit of risk. Lipella Pharmaceuticals Common is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  317.00  in Lipella Pharmaceuticals Common on November 9, 2024 and sell it today you would earn a total of  148.00  from holding Lipella Pharmaceuticals Common or generate 46.69% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Bristol Myers Squibb  vs.  Lipella Pharmaceuticals Common

 Performance 
       Timeline  
Bristol Myers Squibb 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Over the last 90 days Bristol Myers Squibb has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, Bristol Myers is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
Lipella Pharmaceuticals 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Lipella Pharmaceuticals Common are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Lipella Pharmaceuticals displayed solid returns over the last few months and may actually be approaching a breakup point.

Bristol Myers and Lipella Pharmaceuticals Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bristol Myers and Lipella Pharmaceuticals

The main advantage of trading using opposite Bristol Myers and Lipella Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol Myers position performs unexpectedly, Lipella Pharmaceuticals 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 Lipella Pharmaceuticals will offset losses from the drop in Lipella Pharmaceuticals' long position.
The idea behind Bristol Myers Squibb and Lipella Pharmaceuticals Common pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

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