Correlation Between Bristol-Myers Squibb and Inland Real

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Can any of the company-specific risk be diversified away by investing in both Bristol-Myers Squibb and Inland Real 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 Inland Real 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 Inland Real Estateome, you can compare the effects of market volatilities on Bristol-Myers Squibb and Inland Real 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 Inland Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol-Myers Squibb and Inland Real.

Diversification Opportunities for Bristol-Myers Squibb and Inland Real

0.58
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Bristol-Myers and Inland is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Inland Real Estateome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inland Real Estateome 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 Inland Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inland Real Estateome has no effect on the direction of Bristol-Myers Squibb i.e., Bristol-Myers Squibb and Inland Real go up and down completely randomly.

Pair Corralation between Bristol-Myers Squibb and Inland Real

Assuming the 90 days horizon Bristol Myers Squibb is expected to generate 2.18 times more return on investment than Inland Real. However, Bristol-Myers Squibb is 2.18 times more volatile than Inland Real Estateome. It trades about 0.05 of its potential returns per unit of risk. Inland Real Estateome is currently generating about 0.0 per unit of risk. If you would invest  82,740  in Bristol Myers Squibb on August 26, 2024 and sell it today you would earn a total of  17,815  from holding Bristol Myers Squibb or generate 21.53% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy73.9%
ValuesDaily Returns

Bristol Myers Squibb  vs.  Inland Real Estateome

 Performance 
       Timeline  
Bristol Myers Squibb 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Bristol Myers Squibb are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile primary indicators, Bristol-Myers Squibb reported solid returns over the last few months and may actually be approaching a breakup point.
Inland Real Estateome 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Inland Real Estateome are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Inland Real is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Bristol-Myers Squibb and Inland Real Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bristol-Myers Squibb and Inland Real

The main advantage of trading using opposite Bristol-Myers Squibb and Inland Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol-Myers Squibb position performs unexpectedly, Inland Real 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 Inland Real will offset losses from the drop in Inland Real's long position.
The idea behind Bristol Myers Squibb and Inland Real Estateome pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.

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