Correlation Between Bristol-Myers Squibb and NVIDIA
Can any of the company-specific risk be diversified away by investing in both Bristol-Myers Squibb and NVIDIA 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 NVIDIA 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 NVIDIA, you can compare the effects of market volatilities on Bristol-Myers Squibb and NVIDIA 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 NVIDIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol-Myers Squibb and NVIDIA.
Diversification Opportunities for Bristol-Myers Squibb and NVIDIA
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bristol-Myers and NVIDIA is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and NVIDIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NVIDIA 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 NVIDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NVIDIA has no effect on the direction of Bristol-Myers Squibb i.e., Bristol-Myers Squibb and NVIDIA go up and down completely randomly.
Pair Corralation between Bristol-Myers Squibb and NVIDIA
Assuming the 90 days horizon Bristol Myers Squibb is expected to generate 1.75 times more return on investment than NVIDIA. However, Bristol-Myers Squibb is 1.75 times more volatile than NVIDIA. It trades about 0.22 of its potential returns per unit of risk. NVIDIA is currently generating about -0.03 per unit of risk. If you would invest 84,453 in Bristol Myers Squibb on August 28, 2024 and sell it today you would earn a total of 16,102 from holding Bristol Myers Squibb or generate 19.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Bristol Myers Squibb vs. NVIDIA
Performance |
| Timeline |
| Bristol Myers Squibb |
| NVIDIA |
Bristol-Myers Squibb and NVIDIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bristol-Myers Squibb and NVIDIA
The main advantage of trading using opposite Bristol-Myers Squibb and NVIDIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol-Myers Squibb position performs unexpectedly, NVIDIA 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 NVIDIA will offset losses from the drop in NVIDIA'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 |
| NVIDIA vs. Intel | NVIDIA vs. Taiwan Semiconductor Manufacturing | NVIDIA vs. Marvell Technology Group | NVIDIA vs. Micron Technology |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |