Correlation Between Bristol-Myers Squibb and BM Technologies
Can any of the company-specific risk be diversified away by investing in both Bristol-Myers Squibb and BM Technologies 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 BM Technologies 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 BM Technologies WT, you can compare the effects of market volatilities on Bristol-Myers Squibb and BM Technologies 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 BM Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol-Myers Squibb and BM Technologies.
Diversification Opportunities for Bristol-Myers Squibb and BM Technologies
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bristol-Myers and BMTX-WT is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and BM Technologies WT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BM Technologies WT 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 BM Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BM Technologies WT has no effect on the direction of Bristol-Myers Squibb i.e., Bristol-Myers Squibb and BM Technologies go up and down completely randomly.
Pair Corralation between Bristol-Myers Squibb and BM Technologies
Assuming the 90 days horizon Bristol-Myers Squibb is expected to generate 70.6 times less return on investment than BM Technologies. But when comparing it to its historical volatility, Bristol Myers Squibb is 23.42 times less risky than BM Technologies. It trades about 0.04 of its potential returns per unit of risk. BM Technologies WT is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2.00 in BM Technologies WT on August 27, 2024 and sell it today you would earn a total of 44.00 from holding BM Technologies WT or generate 2200.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 84.62% |
| Values | Daily Returns |
Bristol Myers Squibb vs. BM Technologies WT
Performance |
| Timeline |
| Bristol Myers Squibb |
| BM Technologies WT |
Bristol-Myers Squibb and BM Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bristol-Myers Squibb and BM Technologies
The main advantage of trading using opposite Bristol-Myers Squibb and BM Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol-Myers Squibb position performs unexpectedly, BM Technologies 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 BM Technologies will offset losses from the drop in BM Technologies' 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 |
| BM Technologies vs. Copa Holdings SA | BM Technologies vs. United Airlines Holdings | BM Technologies vs. Delta Air Lines | BM Technologies vs. SkyWest |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |