Correlation Between Bristol-Myers Squibb and Daiichi Sankyo
Can any of the company-specific risk be diversified away by investing in both Bristol-Myers Squibb and Daiichi Sankyo 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 Daiichi Sankyo 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 Daiichi Sankyo, you can compare the effects of market volatilities on Bristol-Myers Squibb and Daiichi Sankyo 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 Daiichi Sankyo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol-Myers Squibb and Daiichi Sankyo.
Diversification Opportunities for Bristol-Myers Squibb and Daiichi Sankyo
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bristol-Myers and Daiichi is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Daiichi Sankyo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daiichi Sankyo 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 Daiichi Sankyo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daiichi Sankyo has no effect on the direction of Bristol-Myers Squibb i.e., Bristol-Myers Squibb and Daiichi Sankyo go up and down completely randomly.
Pair Corralation between Bristol-Myers Squibb and Daiichi Sankyo
Assuming the 90 days horizon Bristol Myers Squibb is expected to generate 0.72 times more return on investment than Daiichi Sankyo. However, Bristol Myers Squibb is 1.39 times less risky than Daiichi Sankyo. It trades about 0.22 of its potential returns per unit of risk. Daiichi Sankyo is currently generating about 0.03 per unit of risk. If you would invest 84,500 in Bristol Myers Squibb on August 24, 2024 and sell it today you would earn a total of 16,055 from holding Bristol Myers Squibb or generate 19.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 86.96% |
| Values | Daily Returns |
Bristol Myers Squibb vs. Daiichi Sankyo
Performance |
| Timeline |
| Bristol Myers Squibb |
| Daiichi Sankyo |
Bristol-Myers Squibb and Daiichi Sankyo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bristol-Myers Squibb and Daiichi Sankyo
The main advantage of trading using opposite Bristol-Myers Squibb and Daiichi Sankyo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol-Myers Squibb position performs unexpectedly, Daiichi Sankyo 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 Daiichi Sankyo will offset losses from the drop in Daiichi Sankyo'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 |
| Daiichi Sankyo vs. Astellas Pharma | Daiichi Sankyo vs. Bristol Myers Squibb | Daiichi Sankyo vs. Bayer AG | Daiichi Sankyo vs. AstraZeneca PLC |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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