Correlation Between Bristol-Myers Squibb and E Mini
Can any of the company-specific risk be diversified away by investing in both Bristol-Myers Squibb and E Mini 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 E Mini 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 E Mini SP 500, you can compare the effects of market volatilities on Bristol-Myers Squibb and E Mini 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 E Mini. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol-Myers Squibb and E Mini.
Diversification Opportunities for Bristol-Myers Squibb and E Mini
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bristol-Myers and ESUSD is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and E Mini SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E Mini SP 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 E Mini. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E Mini SP has no effect on the direction of Bristol-Myers Squibb i.e., Bristol-Myers Squibb and E Mini go up and down completely randomly.
Pair Corralation between Bristol-Myers Squibb and E Mini
Assuming the 90 days horizon Bristol-Myers Squibb is expected to generate 4.25 times less return on investment than E Mini. In addition to that, Bristol-Myers Squibb is 5.23 times more volatile than E Mini SP 500. It trades about 0.0 of its total potential returns per unit of risk. E Mini SP 500 is currently generating about 0.1 per unit of volatility. If you would invest 400,325 in E Mini SP 500 on August 26, 2024 and sell it today you would earn a total of 198,375 from holding E Mini SP 500 or generate 49.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 42.86% |
| Values | Daily Returns |
Bristol Myers Squibb vs. E Mini SP 500
Performance |
| Timeline |
| Bristol Myers Squibb |
| E Mini SP |
Bristol-Myers Squibb and E Mini Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bristol-Myers Squibb and E Mini
The main advantage of trading using opposite Bristol-Myers Squibb and E Mini positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol-Myers Squibb position performs unexpectedly, E Mini 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 E Mini will offset losses from the drop in E Mini'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 |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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