Correlation Between Eli Lilly and Bristol Myers
Can any of the company-specific risk be diversified away by investing in both Eli Lilly 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 Eli Lilly and Bristol Myers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eli Lilly and and Bristol Myers Squibb, you can compare the effects of market volatilities on Eli Lilly 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 Eli Lilly with a short position of Bristol Myers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eli Lilly and Bristol Myers.
Diversification Opportunities for Eli Lilly and Bristol Myers
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Eli and Bristol is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Eli Lilly and 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 Eli Lilly 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 Eli Lilly and 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 Eli Lilly i.e., Eli Lilly and Bristol Myers go up and down completely randomly.
Pair Corralation between Eli Lilly and Bristol Myers
Considering the 90-day investment horizon Eli Lilly and is expected to under-perform the Bristol Myers. But the stock apears to be less risky and, when comparing its historical volatility, Eli Lilly and is 1.04 times less risky than Bristol Myers. The stock trades about -0.13 of its potential returns per unit of risk. The Bristol Myers Squibb is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 4,917 in Bristol Myers Squibb on August 29, 2024 and sell it today you would earn a total of 957.00 from holding Bristol Myers Squibb or generate 19.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eli Lilly and vs. Bristol Myers Squibb
Performance |
| Timeline |
| Eli Lilly |
| Bristol Myers Squibb |
Eli Lilly and Bristol Myers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eli Lilly and Bristol Myers
The main advantage of trading using opposite Eli Lilly and Bristol Myers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eli Lilly 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.| Eli Lilly vs. Johnson Johnson | Eli Lilly vs. Bristol Myers Squibb | Eli Lilly vs. AbbVie Inc | Eli Lilly vs. Pfizer Inc |
| Bristol Myers vs. Merck Company | Bristol Myers vs. Pharvaris BV | Bristol Myers vs. Brinker International | Bristol Myers vs. Alcoa Corp |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |