Correlation Between Bristol-Myers Squibb and Entia Biosciences
Can any of the company-specific risk be diversified away by investing in both Bristol-Myers Squibb and Entia Biosciences 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 Entia Biosciences 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 Entia Biosciences, you can compare the effects of market volatilities on Bristol-Myers Squibb and Entia Biosciences 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 Entia Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol-Myers Squibb and Entia Biosciences.
Diversification Opportunities for Bristol-Myers Squibb and Entia Biosciences
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bristol-Myers and Entia is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Entia Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entia Biosciences 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 Entia Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entia Biosciences has no effect on the direction of Bristol-Myers Squibb i.e., Bristol-Myers Squibb and Entia Biosciences go up and down completely randomly.
Pair Corralation between Bristol-Myers Squibb and Entia Biosciences
Assuming the 90 days horizon Bristol Myers Squibb is expected to under-perform the Entia Biosciences. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bristol Myers Squibb is 1.39 times less risky than Entia Biosciences. The pink sheet trades about 0.0 of its potential returns per unit of risk. The Entia Biosciences is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 0.03 in Entia Biosciences on September 5, 2024 and sell it today you would lose (0.01) from holding Entia Biosciences or give up 33.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 45.25% |
| Values | Daily Returns |
Bristol Myers Squibb vs. Entia Biosciences
Performance |
| Timeline |
| Bristol Myers Squibb |
| Entia Biosciences |
Bristol-Myers Squibb and Entia Biosciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bristol-Myers Squibb and Entia Biosciences
The main advantage of trading using opposite Bristol-Myers Squibb and Entia Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol-Myers Squibb position performs unexpectedly, Entia Biosciences 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 Entia Biosciences will offset losses from the drop in Entia Biosciences' 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 |
| Entia Biosciences vs. PreveCeutical Medical | Entia Biosciences vs. Cannabics Pharmaceuticals | Entia Biosciences vs. Heron Therapeuti | Entia Biosciences vs. OUTLOOK THERAPEUTICS INC |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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