Correlation Between Fortinet and Bristol Myers
Can any of the company-specific risk be diversified away by investing in both Fortinet 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 Fortinet and Bristol Myers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortinet and Bristol Myers Squibb, you can compare the effects of market volatilities on Fortinet 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 Fortinet with a short position of Bristol Myers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortinet and Bristol Myers.
Diversification Opportunities for Fortinet and Bristol Myers
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fortinet and Bristol is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Fortinet 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 Fortinet 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 Fortinet 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 Fortinet i.e., Fortinet and Bristol Myers go up and down completely randomly.
Pair Corralation between Fortinet and Bristol Myers
Given the investment horizon of 90 days Fortinet is expected to generate 1.06 times less return on investment than Bristol Myers. But when comparing it to its historical volatility, Fortinet is 1.63 times less risky than Bristol Myers. It trades about 0.22 of its potential returns per unit of risk. Bristol Myers Squibb is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 73,509 in Bristol Myers Squibb on September 12, 2024 and sell it today you would earn a total of 22,046 from holding Bristol Myers Squibb or generate 29.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 96.88% |
| Values | Daily Returns |
Fortinet vs. Bristol Myers Squibb
Performance |
| Timeline |
| Fortinet |
| Bristol Myers Squibb |
Fortinet and Bristol Myers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortinet and Bristol Myers
The main advantage of trading using opposite Fortinet and Bristol Myers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortinet 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.The idea behind Fortinet and Bristol Myers Squibb pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Bristol Myers vs. Novartis AG | Bristol Myers vs. Bayer AG | Bristol Myers vs. Astellas Pharma | Bristol Myers vs. Roche Holding AG |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |