Correlation Between Bristol-Myers Squibb and Dell Technologies
Can any of the company-specific risk be diversified away by investing in both Bristol-Myers Squibb and Dell 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 Dell 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 Dell Technologies, you can compare the effects of market volatilities on Bristol-Myers Squibb and Dell 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 Dell Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol-Myers Squibb and Dell Technologies.
Diversification Opportunities for Bristol-Myers Squibb and Dell Technologies
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bristol-Myers and Dell is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Dell Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dell Technologies 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 Dell Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dell Technologies has no effect on the direction of Bristol-Myers Squibb i.e., Bristol-Myers Squibb and Dell Technologies go up and down completely randomly.
Pair Corralation between Bristol-Myers Squibb and Dell Technologies
Assuming the 90 days horizon Bristol-Myers Squibb is expected to generate 1.8 times less return on investment than Dell Technologies. In addition to that, Bristol-Myers Squibb is 1.06 times more volatile than Dell Technologies. It trades about 0.05 of its total potential returns per unit of risk. Dell Technologies is currently generating about 0.09 per unit of volatility. If you would invest 7,290 in Dell Technologies on August 24, 2024 and sell it today you would earn a total of 6,602 from holding Dell Technologies or generate 90.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 72.8% |
| Values | Daily Returns |
Bristol Myers Squibb vs. Dell Technologies
Performance |
| Timeline |
| Bristol Myers Squibb |
| Dell Technologies |
Bristol-Myers Squibb and Dell Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bristol-Myers Squibb and Dell Technologies
The main advantage of trading using opposite Bristol-Myers Squibb and Dell Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol-Myers Squibb position performs unexpectedly, Dell 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 Dell Technologies will offset losses from the drop in Dell 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 |
| Dell Technologies vs. Nano Dimension | Dell Technologies vs. NetApp Inc | Dell Technologies vs. Super Micro Computer | Dell Technologies vs. Pure Storage |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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