Correlation Between Bristol-Myers Squibb and Palantir Technologies
Can any of the company-specific risk be diversified away by investing in both Bristol-Myers Squibb and Palantir Technologies 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 Palantir Technologies 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 Palantir Technologies Class, you can compare the effects of market volatilities on Bristol-Myers Squibb and Palantir Technologies 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 Palantir Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol-Myers Squibb and Palantir Technologies.
Diversification Opportunities for Bristol-Myers Squibb and Palantir Technologies
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bristol-Myers and Palantir is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Palantir Technologies Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palantir Technologies 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 Palantir Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palantir Technologies has no effect on the direction of Bristol-Myers Squibb i.e., Bristol-Myers Squibb and Palantir Technologies go up and down completely randomly.
Pair Corralation between Bristol-Myers Squibb and Palantir Technologies
Assuming the 90 days horizon Bristol-Myers Squibb is expected to generate 3.16 times less return on investment than Palantir Technologies. But when comparing it to its historical volatility, Bristol Myers Squibb is 1.25 times less risky than Palantir Technologies. It trades about 0.12 of its potential returns per unit of risk. Palantir Technologies Class is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 3,051 in Palantir Technologies Class on September 2, 2024 and sell it today you would earn a total of 3,657 from holding Palantir Technologies Class or generate 119.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.44% |
| Values | Daily Returns |
Bristol Myers Squibb vs. Palantir Technologies Class
Performance |
| Timeline |
| Bristol Myers Squibb |
| Palantir Technologies |
Bristol-Myers Squibb and Palantir Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bristol-Myers Squibb and Palantir Technologies
The main advantage of trading using opposite Bristol-Myers Squibb and Palantir Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol-Myers Squibb position performs unexpectedly, Palantir Technologies 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 Palantir Technologies will offset losses from the drop in Palantir Technologies' 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 |
| Palantir Technologies vs. Palo Alto Networks | Palantir Technologies vs. Adobe Systems Incorporated | Palantir Technologies vs. Crowdstrike Holdings | Palantir Technologies vs. Block Inc |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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