Correlation Between Bristol Myers and Zoetis
Can any of the company-specific risk be diversified away by investing in both Bristol Myers and Zoetis 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 Zoetis 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 Zoetis Inc, you can compare the effects of market volatilities on Bristol Myers and Zoetis 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 Zoetis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol Myers and Zoetis.
Diversification Opportunities for Bristol Myers and Zoetis
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bristol and Zoetis is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Zoetis Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zoetis Inc 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 Zoetis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zoetis Inc has no effect on the direction of Bristol Myers i.e., Bristol Myers and Zoetis go up and down completely randomly.
Pair Corralation between Bristol Myers and Zoetis
Considering the 90-day investment horizon Bristol Myers Squibb is expected to generate 1.07 times more return on investment than Zoetis. However, Bristol Myers is 1.07 times more volatile than Zoetis Inc. It trades about 0.02 of its potential returns per unit of risk. Zoetis Inc is currently generating about 0.01 per unit of risk. If you would invest 5,698 in Bristol Myers Squibb on August 29, 2024 and sell it today you would earn a total of 229.00 from holding Bristol Myers Squibb or generate 4.02% 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. Zoetis Inc
Performance |
| Timeline |
| Bristol Myers Squibb |
| Zoetis Inc |
Bristol Myers and Zoetis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bristol Myers and Zoetis
The main advantage of trading using opposite Bristol Myers and Zoetis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol Myers position performs unexpectedly, Zoetis 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 Zoetis will offset losses from the drop in Zoetis' long position.| Bristol Myers vs. Pharvaris BV | Bristol Myers vs. Brinker International | Bristol Myers vs. Alcoa Corp | Bristol Myers vs. Direxion Daily FTSE |
| Zoetis vs. Emergent Biosolutions | Zoetis vs. Bausch Health Companies | Zoetis vs. Neurocrine Biosciences | Zoetis vs. Teva Pharma Industries |
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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