Correlation Between Brinker International and Bristol Myers
Can any of the company-specific risk be diversified away by investing in both Brinker International 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 Brinker International and Bristol Myers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brinker International and Bristol Myers Squibb, you can compare the effects of market volatilities on Brinker International 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 Brinker International with a short position of Bristol Myers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brinker International and Bristol Myers.
Diversification Opportunities for Brinker International and Bristol Myers
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Brinker and Bristol is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Brinker International 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 Brinker International 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 Brinker International 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 Brinker International i.e., Brinker International and Bristol Myers go up and down completely randomly.
Pair Corralation between Brinker International and Bristol Myers
Considering the 90-day investment horizon Brinker International is expected to generate 1.42 times more return on investment than Bristol Myers. However, Brinker International is 1.42 times more volatile than Bristol Myers Squibb. It trades about 0.21 of its potential returns per unit of risk. Bristol Myers Squibb is currently generating about 0.04 per unit of risk. If you would invest 3,502 in Brinker International on September 1, 2024 and sell it today you would earn a total of 9,725 from holding Brinker International or generate 277.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brinker International vs. Bristol Myers Squibb
Performance |
| Timeline |
| Brinker International |
| Bristol Myers Squibb |
Brinker International and Bristol Myers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brinker International and Bristol Myers
The main advantage of trading using opposite Brinker International and Bristol Myers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brinker International 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.| Brinker International vs. Dennys Corp | Brinker International vs. Bloomin Brands | Brinker International vs. Jack In The | Brinker International vs. Dine Brands Global |
| Bristol Myers vs. Crinetics Pharmaceuticals | Bristol Myers vs. Enanta Pharmaceuticals | Bristol Myers vs. Amicus Therapeutics | Bristol Myers vs. Connect Biopharma Holdings |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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