Correlation Between Bristol Myers and Sangamo Therapeutics
Can any of the company-specific risk be diversified away by investing in both Bristol Myers and Sangamo 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 Sangamo 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 Sangamo Therapeutics, you can compare the effects of market volatilities on Bristol Myers and Sangamo 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 Sangamo Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol Myers and Sangamo Therapeutics.
Diversification Opportunities for Bristol Myers and Sangamo Therapeutics
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bristol and Sangamo is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Sangamo Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sangamo 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 Sangamo Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sangamo Therapeutics has no effect on the direction of Bristol Myers i.e., Bristol Myers and Sangamo Therapeutics go up and down completely randomly.
Pair Corralation between Bristol Myers and Sangamo Therapeutics
Considering the 90-day investment horizon Bristol Myers is expected to generate 5.41 times less return on investment than Sangamo Therapeutics. But when comparing it to its historical volatility, Bristol Myers Squibb is 3.29 times less risky than Sangamo Therapeutics. It trades about 0.12 of its potential returns per unit of risk. Sangamo Therapeutics is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 170.00 in Sangamo Therapeutics on September 1, 2024 and sell it today you would earn a total of 56.00 from holding Sangamo Therapeutics or generate 32.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bristol Myers Squibb vs. Sangamo Therapeutics
Performance |
| Timeline |
| Bristol Myers Squibb |
| Sangamo Therapeutics |
Bristol Myers and Sangamo Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bristol Myers and Sangamo Therapeutics
The main advantage of trading using opposite Bristol Myers and Sangamo Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol Myers position performs unexpectedly, Sangamo 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 Sangamo Therapeutics will offset losses from the drop in Sangamo Therapeutics' long position.| Bristol Myers vs. Crinetics Pharmaceuticals | Bristol Myers vs. Enanta Pharmaceuticals | Bristol Myers vs. Amicus Therapeutics | Bristol Myers vs. Connect Biopharma Holdings |
| Sangamo Therapeutics vs. Editas Medicine | Sangamo Therapeutics vs. Intellia Therapeutics | Sangamo Therapeutics vs. Bluebird bio | Sangamo Therapeutics vs. Alnylam Pharmaceuticals |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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