Correlation Between Mereo BioPharma and Bristol Myers
Can any of the company-specific risk be diversified away by investing in both Mereo BioPharma 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 Mereo BioPharma and Bristol Myers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mereo BioPharma Group and Bristol Myers Squibb, you can compare the effects of market volatilities on Mereo BioPharma 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 Mereo BioPharma with a short position of Bristol Myers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mereo BioPharma and Bristol Myers.
Diversification Opportunities for Mereo BioPharma and Bristol Myers
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mereo and Bristol is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Mereo BioPharma Group 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 Mereo BioPharma 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 Mereo BioPharma Group 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 Mereo BioPharma i.e., Mereo BioPharma and Bristol Myers go up and down completely randomly.
Pair Corralation between Mereo BioPharma and Bristol Myers
Given the investment horizon of 90 days Mereo BioPharma is expected to generate 1.11 times less return on investment than Bristol Myers. In addition to that, Mereo BioPharma is 2.2 times more volatile than Bristol Myers Squibb. It trades about 0.02 of its total potential returns per unit of risk. Bristol Myers Squibb is currently generating about 0.05 per unit of volatility. If you would invest 4,762 in Bristol Myers Squibb on November 9, 2024 and sell it today you would earn a total of 980.00 from holding Bristol Myers Squibb or generate 20.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mereo BioPharma Group vs. Bristol Myers Squibb
Performance |
| Timeline |
| Mereo BioPharma Group |
| Bristol Myers Squibb |
Mereo BioPharma and Bristol Myers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mereo BioPharma and Bristol Myers
The main advantage of trading using opposite Mereo BioPharma and Bristol Myers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mereo BioPharma 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.| Mereo BioPharma vs. Terns Pharmaceuticals | Mereo BioPharma vs. PDS Biotechnology Corp | Mereo BioPharma vs. Inozyme Pharma | Mereo BioPharma vs. Hookipa Pharma |
| Bristol Myers vs. AbbVie Inc | Bristol Myers vs. Merck Company | Bristol Myers vs. Gilead Sciences | Bristol Myers vs. Johnson Johnson |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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