Correlation Between Bristol-Myers Squibb and Daicel
Can any of the company-specific risk be diversified away by investing in both Bristol-Myers Squibb and Daicel 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 Daicel 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 Daicel, you can compare the effects of market volatilities on Bristol-Myers Squibb and Daicel 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 Daicel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol-Myers Squibb and Daicel.
Diversification Opportunities for Bristol-Myers Squibb and Daicel
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bristol-Myers and Daicel is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Daicel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daicel 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 Daicel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daicel has no effect on the direction of Bristol-Myers Squibb i.e., Bristol-Myers Squibb and Daicel go up and down completely randomly.
Pair Corralation between Bristol-Myers Squibb and Daicel
Assuming the 90 days horizon Bristol-Myers Squibb is expected to generate 4.91 times less return on investment than Daicel. In addition to that, Bristol-Myers Squibb is 2.91 times more volatile than Daicel. It trades about 0.0 of its total potential returns per unit of risk. Daicel is currently generating about 0.06 per unit of volatility. If you would invest 612.00 in Daicel on September 3, 2024 and sell it today you would earn a total of 240.00 from holding Daicel or generate 39.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 54.0% |
| Values | Daily Returns |
Bristol Myers Squibb vs. Daicel
Performance |
| Timeline |
| Bristol Myers Squibb |
| Daicel |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Bristol-Myers Squibb and Daicel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bristol-Myers Squibb and Daicel
The main advantage of trading using opposite Bristol-Myers Squibb and Daicel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol-Myers Squibb position performs unexpectedly, Daicel 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 Daicel will offset losses from the drop in Daicel's 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 |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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