Correlation Between Meta Platforms and Bristol Myers
Can any of the company-specific risk be diversified away by investing in both Meta Platforms 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 Meta Platforms and Bristol Myers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meta Platforms and Bristol Myers Squibb, you can compare the effects of market volatilities on Meta Platforms 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 Meta Platforms with a short position of Bristol Myers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Platforms and Bristol Myers.
Diversification Opportunities for Meta Platforms and Bristol Myers
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Meta and Bristol is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms 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 Meta Platforms 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 Meta Platforms 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 Meta Platforms i.e., Meta Platforms and Bristol Myers go up and down completely randomly.
Pair Corralation between Meta Platforms and Bristol Myers
Given the investment horizon of 90 days Meta Platforms is expected to generate 0.58 times more return on investment than Bristol Myers. However, Meta Platforms is 1.73 times less risky than Bristol Myers. It trades about 0.15 of its potential returns per unit of risk. Bristol Myers Squibb is currently generating about 0.0 per unit of risk. If you would invest 11,653 in Meta Platforms on September 16, 2024 and sell it today you would earn a total of 50,382 from holding Meta Platforms or generate 432.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 46.98% |
| Values | Daily Returns |
Meta Platforms vs. Bristol Myers Squibb
Performance |
| Timeline |
| Meta Platforms |
| Bristol Myers Squibb |
Meta Platforms and Bristol Myers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meta Platforms and Bristol Myers
The main advantage of trading using opposite Meta Platforms and Bristol Myers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meta Platforms 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.| Meta Platforms vs. Twilio Inc | Meta Platforms vs. Snap Inc | Meta Platforms vs. Baidu Inc | Meta Platforms vs. Tencent Holdings Ltd |
| 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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