Correlation Between Bristol Myers and Medtronic PLC
Can any of the company-specific risk be diversified away by investing in both Bristol Myers and Medtronic 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 Medtronic 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 Medtronic PLC, you can compare the effects of market volatilities on Bristol Myers and Medtronic 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 Medtronic PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol Myers and Medtronic PLC.
Diversification Opportunities for Bristol Myers and Medtronic PLC
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bristol and Medtronic is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Medtronic PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medtronic 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 Medtronic PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medtronic PLC has no effect on the direction of Bristol Myers i.e., Bristol Myers and Medtronic PLC go up and down completely randomly.
Pair Corralation between Bristol Myers and Medtronic PLC
Considering the 90-day investment horizon Bristol Myers Squibb is expected to generate 1.85 times more return on investment than Medtronic PLC. However, Bristol Myers is 1.85 times more volatile than Medtronic PLC. It trades about 0.15 of its potential returns per unit of risk. Medtronic PLC is currently generating about 0.05 per unit of risk. If you would invest 4,069 in Bristol Myers Squibb on August 30, 2024 and sell it today you would earn a total of 1,858 from holding Bristol Myers Squibb or generate 45.66% 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. Medtronic PLC
Performance |
| Timeline |
| Bristol Myers Squibb |
| Medtronic PLC |
Bristol Myers and Medtronic PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bristol Myers and Medtronic PLC
The main advantage of trading using opposite Bristol Myers and Medtronic PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol Myers position performs unexpectedly, Medtronic 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 Medtronic PLC will offset losses from the drop in Medtronic PLC's long position.| Bristol Myers vs. Emergent Biosolutions | Bristol Myers vs. Bausch Health Companies | Bristol Myers vs. Neurocrine Biosciences | Bristol Myers vs. Teva Pharma Industries |
| Medtronic PLC vs. Edwards Lifesciences Corp | Medtronic PLC vs. Abbott Laboratories | Medtronic PLC vs. Boston Scientific Corp | Medtronic PLC vs. Zimmer Biomet 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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