Correlation Between Bristol Myers and Omega Therapeutics
Can any of the company-specific risk be diversified away by investing in both Bristol Myers and Omega Therapeutics 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 Omega Therapeutics 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 Omega Therapeutics, you can compare the effects of market volatilities on Bristol Myers and Omega Therapeutics 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 Omega Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol Myers and Omega Therapeutics.
Diversification Opportunities for Bristol Myers and Omega Therapeutics
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bristol and Omega is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Omega Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omega Therapeutics 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 Omega Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omega Therapeutics has no effect on the direction of Bristol Myers i.e., Bristol Myers and Omega Therapeutics go up and down completely randomly.
Pair Corralation between Bristol Myers and Omega Therapeutics
Considering the 90-day investment horizon Bristol Myers Squibb is expected to generate 0.33 times more return on investment than Omega Therapeutics. However, Bristol Myers Squibb is 2.99 times less risky than Omega Therapeutics. It trades about 0.15 of its potential returns per unit of risk. Omega Therapeutics is currently generating about -0.07 per unit of risk. If you would invest 4,067 in Bristol Myers Squibb on September 2, 2024 and sell it today you would earn a total of 1,855 from holding Bristol Myers Squibb or generate 45.61% 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. Omega Therapeutics
Performance |
| Timeline |
| Bristol Myers Squibb |
| Omega Therapeutics |
Bristol Myers and Omega Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bristol Myers and Omega Therapeutics
The main advantage of trading using opposite Bristol Myers and Omega Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol Myers position performs unexpectedly, Omega Therapeutics 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 Omega Therapeutics will offset losses from the drop in Omega Therapeutics' long position.| Bristol Myers vs. AbbVie Inc | Bristol Myers vs. Merck Company | Bristol Myers vs. Gilead Sciences | Bristol Myers vs. Johnson Johnson |
| Omega Therapeutics vs. Pmv Pharmaceuticals | Omega Therapeutics vs. Eliem Therapeutics | Omega Therapeutics vs. MediciNova | Omega Therapeutics vs. Pharvaris BV |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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