Correlation Between Bristol-Myers Squibb and Airports
Can any of the company-specific risk be diversified away by investing in both Bristol-Myers Squibb and Airports 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 Squibb and Airports 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 Airports of Thailand, you can compare the effects of market volatilities on Bristol-Myers Squibb and Airports 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 Squibb with a short position of Airports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol-Myers Squibb and Airports.
Diversification Opportunities for Bristol-Myers Squibb and Airports
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bristol-Myers and Airports is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Airports of Thailand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airports of Thailand and Bristol-Myers Squibb 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 Airports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airports of Thailand has no effect on the direction of Bristol-Myers Squibb i.e., Bristol-Myers Squibb and Airports go up and down completely randomly.
Pair Corralation between Bristol-Myers Squibb and Airports
Assuming the 90 days horizon Bristol Myers Squibb is expected to generate 1.68 times more return on investment than Airports. However, Bristol-Myers Squibb is 1.68 times more volatile than Airports of Thailand. It trades about 0.12 of its potential returns per unit of risk. Airports of Thailand is currently generating about 0.16 per unit of risk. If you would invest 80,011 in Bristol Myers Squibb on August 28, 2024 and sell it today you would earn a total of 20,544 from holding Bristol Myers Squibb or generate 25.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.31% |
| Values | Daily Returns |
Bristol Myers Squibb vs. Airports of Thailand
Performance |
| Timeline |
| Bristol Myers Squibb |
| Airports of Thailand |
Bristol-Myers Squibb and Airports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bristol-Myers Squibb and Airports
The main advantage of trading using opposite Bristol-Myers Squibb and Airports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol-Myers Squibb position performs unexpectedly, Airports 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 Airports will offset losses from the drop in Airports' long position.| Bristol-Myers Squibb vs. Novartis AG | Bristol-Myers Squibb vs. Bayer AG | Bristol-Myers Squibb vs. Astellas Pharma | Bristol-Myers Squibb vs. Roche Holding AG |
| Airports vs. Aerofoam Metals | Airports vs. Porvair plc | Airports vs. Tyson Foods | Airports vs. Lion One Metals |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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