Correlation Between TechnipFMC PLC and Bristol-Myers Squibb
Can any of the company-specific risk be diversified away by investing in both TechnipFMC PLC 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 TechnipFMC PLC 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 TechnipFMC PLC and Bristol Myers Squibb, you can compare the effects of market volatilities on TechnipFMC PLC 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 TechnipFMC PLC with a short position of Bristol-Myers Squibb. Check out your portfolio center. Please also check ongoing floating volatility patterns of TechnipFMC PLC and Bristol-Myers Squibb.
Diversification Opportunities for TechnipFMC PLC and Bristol-Myers Squibb
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TechnipFMC and Bristol-Myers is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding TechnipFMC PLC 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 TechnipFMC PLC 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 TechnipFMC PLC 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 TechnipFMC PLC i.e., TechnipFMC PLC and Bristol-Myers Squibb go up and down completely randomly.
Pair Corralation between TechnipFMC PLC and Bristol-Myers Squibb
Considering the 90-day investment horizon TechnipFMC PLC is expected to generate 0.51 times more return on investment than Bristol-Myers Squibb. However, TechnipFMC PLC is 1.95 times less risky than Bristol-Myers Squibb. It trades about 0.12 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 1,885 in TechnipFMC PLC on September 4, 2024 and sell it today you would earn a total of 1,267 from holding TechnipFMC PLC or generate 67.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 76.11% |
| Values | Daily Returns |
TechnipFMC PLC vs. Bristol Myers Squibb
Performance |
| Timeline |
| TechnipFMC PLC |
| Bristol Myers Squibb |
TechnipFMC PLC and Bristol-Myers Squibb Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TechnipFMC PLC and Bristol-Myers Squibb
The main advantage of trading using opposite TechnipFMC PLC and Bristol-Myers Squibb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TechnipFMC PLC 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.| TechnipFMC PLC vs. Geospace Technologies | TechnipFMC PLC vs. Weatherford International PLC | TechnipFMC PLC vs. Enerflex | TechnipFMC PLC vs. RPC Inc |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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