Correlation Between 3D Systems and Bristol-Myers Squibb
Can any of the company-specific risk be diversified away by investing in both 3D Systems and Bristol-Myers Squibb 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 3D Systems and Bristol-Myers Squibb into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3D Systems and Bristol Myers Squibb, you can compare the effects of market volatilities on 3D Systems and Bristol-Myers Squibb 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 3D Systems with a short position of Bristol-Myers Squibb. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3D Systems and Bristol-Myers Squibb.
Diversification Opportunities for 3D Systems and Bristol-Myers Squibb
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DDD and Bristol-Myers is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding 3D Systems and Bristol Myers Squibb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bristol Myers Squibb and 3D Systems 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 3D Systems are associated (or correlated) with Bristol-Myers Squibb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bristol Myers Squibb has no effect on the direction of 3D Systems i.e., 3D Systems and Bristol-Myers Squibb go up and down completely randomly.
Pair Corralation between 3D Systems and Bristol-Myers Squibb
Considering the 90-day investment horizon 3D Systems is expected to generate 8.86 times less return on investment than Bristol-Myers Squibb. In addition to that, 3D Systems is 1.49 times more volatile than Bristol Myers Squibb. It trades about 0.02 of its total potential returns per unit of risk. Bristol Myers Squibb is currently generating about 0.22 per unit of volatility. If you would invest 84,500 in Bristol Myers Squibb on August 31, 2024 and sell it today you would earn a total of 16,055 from holding Bristol Myers Squibb or generate 19.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
3D Systems vs. Bristol Myers Squibb
Performance |
| Timeline |
| 3D Systems |
| Bristol Myers Squibb |
3D Systems and Bristol-Myers Squibb Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3D Systems and Bristol-Myers Squibb
The main advantage of trading using opposite 3D Systems and Bristol-Myers Squibb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3D Systems position performs unexpectedly, Bristol-Myers Squibb 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 Bristol-Myers Squibb will offset losses from the drop in Bristol-Myers Squibb's long position.| 3D Systems vs. Desktop Metal | 3D Systems vs. Nano Dimension | 3D Systems vs. Markforged Holding Corp | 3D Systems vs. Stratasys |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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