Correlation Between Bristol-Myers Squibb and Lithium One
Can any of the company-specific risk be diversified away by investing in both Bristol-Myers Squibb and Lithium One 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 Lithium One 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 Lithium One Metals, you can compare the effects of market volatilities on Bristol-Myers Squibb and Lithium One 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 Lithium One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol-Myers Squibb and Lithium One.
Diversification Opportunities for Bristol-Myers Squibb and Lithium One
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bristol-Myers and Lithium is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Lithium One Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lithium One Metals 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 Lithium One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lithium One Metals has no effect on the direction of Bristol-Myers Squibb i.e., Bristol-Myers Squibb and Lithium One go up and down completely randomly.
Pair Corralation between Bristol-Myers Squibb and Lithium One
Assuming the 90 days horizon Bristol-Myers Squibb is expected to generate 4.39 times less return on investment than Lithium One. But when comparing it to its historical volatility, Bristol Myers Squibb is 4.15 times less risky than Lithium One. It trades about 0.07 of its potential returns per unit of risk. Lithium One Metals is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 7.83 in Lithium One Metals on November 28, 2024 and sell it today you would lose (6.71) from holding Lithium One Metals or give up 85.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 30.79% |
| Values | Daily Returns |
Bristol Myers Squibb vs. Lithium One Metals
Performance |
| Timeline |
| Bristol Myers Squibb |
| Lithium One Metals |
Bristol-Myers Squibb and Lithium One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bristol-Myers Squibb and Lithium One
The main advantage of trading using opposite Bristol-Myers Squibb and Lithium One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol-Myers Squibb position performs unexpectedly, Lithium One 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 Lithium One will offset losses from the drop in Lithium One'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 |
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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