Correlation Between Bristol Myers and Spero Therapeutics
Can any of the company-specific risk be diversified away by investing in both Bristol Myers and Spero 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 Spero 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 Spero Therapeutics, you can compare the effects of market volatilities on Bristol Myers and Spero 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 Spero Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol Myers and Spero Therapeutics.
Diversification Opportunities for Bristol Myers and Spero Therapeutics
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bristol and Spero is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Spero Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spero 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 Spero Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spero Therapeutics has no effect on the direction of Bristol Myers i.e., Bristol Myers and Spero Therapeutics go up and down completely randomly.
Pair Corralation between Bristol Myers and Spero Therapeutics
Considering the 90-day investment horizon Bristol Myers Squibb is expected to generate 0.75 times more return on investment than Spero Therapeutics. However, Bristol Myers Squibb is 1.33 times less risky than Spero Therapeutics. It trades about 0.15 of its potential returns per unit of risk. Spero Therapeutics 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bristol Myers Squibb vs. Spero Therapeutics
Performance |
| Timeline |
| Bristol Myers Squibb |
| Spero Therapeutics |
Bristol Myers and Spero Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bristol Myers and Spero Therapeutics
The main advantage of trading using opposite Bristol Myers and Spero Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol Myers position performs unexpectedly, Spero 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 Spero Therapeutics will offset losses from the drop in Spero Therapeutics' long position.| Bristol Myers vs. Emergent Biosolutions | Bristol Myers vs. Bausch Health Companies | Bristol Myers vs. Neurocrine Biosciences | Bristol Myers vs. Teva Pharma Industries |
| Spero Therapeutics vs. Assembly Biosciences | Spero Therapeutics vs. Achilles Therapeutics PLC | Spero Therapeutics vs. Instil Bio | Spero Therapeutics vs. CytomX 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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