Correlation Between NOW and Bristol Myers
Can any of the company-specific risk be diversified away by investing in both NOW and Bristol Myers 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 NOW and Bristol Myers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NOW Inc and Bristol Myers Squibb, you can compare the effects of market volatilities on NOW and Bristol Myers 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 NOW with a short position of Bristol Myers. Check out your portfolio center. Please also check ongoing floating volatility patterns of NOW and Bristol Myers.
Diversification Opportunities for NOW and Bristol Myers
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NOW and Bristol is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NOW Inc 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 NOW 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 NOW Inc are associated (or correlated) with Bristol Myers. 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 NOW i.e., NOW and Bristol Myers go up and down completely randomly.
Pair Corralation between NOW and Bristol Myers
Assuming the 90 days trading horizon NOW is expected to generate 10.71 times less return on investment than Bristol Myers. But when comparing it to its historical volatility, NOW Inc is 14.28 times less risky than Bristol Myers. It trades about 0.03 of its potential returns per unit of risk. Bristol Myers Squibb is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 109,907 in Bristol Myers Squibb on November 28, 2024 and sell it today you would earn a total of 10,498 from holding Bristol Myers Squibb or generate 9.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NOW Inc vs. Bristol Myers Squibb
Performance |
| Timeline |
| NOW Inc |
| Bristol Myers Squibb |
NOW and Bristol Myers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NOW and Bristol Myers
The main advantage of trading using opposite NOW and Bristol Myers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NOW position performs unexpectedly, Bristol Myers 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 will offset losses from the drop in Bristol Myers' long position.| NOW vs. Desarrolladora Homex SAB | NOW vs. Burlington Stores | NOW vs. McEwen Mining | NOW vs. GMxico Transportes SAB |
| Bristol Myers vs. Lloyds Banking Group | Bristol Myers vs. Desarrolladora Homex SAB | Bristol Myers vs. United States Steel | Bristol Myers vs. Grupo Hotelero Santa |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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