Correlation Between Bristol-Myers Squibb and Empire State
Can any of the company-specific risk be diversified away by investing in both Bristol-Myers Squibb and Empire State 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 Empire State 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 Empire State Realty, you can compare the effects of market volatilities on Bristol-Myers Squibb and Empire State 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 Empire State. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol-Myers Squibb and Empire State.
Diversification Opportunities for Bristol-Myers Squibb and Empire State
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bristol-Myers and Empire is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Empire State Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empire State Realty 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 Empire State. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empire State Realty has no effect on the direction of Bristol-Myers Squibb i.e., Bristol-Myers Squibb and Empire State go up and down completely randomly.
Pair Corralation between Bristol-Myers Squibb and Empire State
Assuming the 90 days horizon Bristol Myers Squibb is expected to generate 2.25 times more return on investment than Empire State. However, Bristol-Myers Squibb is 2.25 times more volatile than Empire State Realty. It trades about 0.04 of its potential returns per unit of risk. Empire State Realty is currently generating about 0.05 per unit of risk. If you would invest 86,229 in Bristol Myers Squibb on September 2, 2024 and sell it today you would earn a total of 14,326 from holding Bristol Myers Squibb or generate 16.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 75.4% |
| Values | Daily Returns |
Bristol Myers Squibb vs. Empire State Realty
Performance |
| Timeline |
| Bristol Myers Squibb |
| Empire State Realty |
Bristol-Myers Squibb and Empire State Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bristol-Myers Squibb and Empire State
The main advantage of trading using opposite Bristol-Myers Squibb and Empire State positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol-Myers Squibb position performs unexpectedly, Empire State 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 Empire State will offset losses from the drop in Empire State'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 |
| Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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