Correlation Between Sanofi ADR and Bristol Myers
Can any of the company-specific risk be diversified away by investing in both Sanofi ADR 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 Sanofi ADR and Bristol Myers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sanofi ADR and Bristol Myers Squibb, you can compare the effects of market volatilities on Sanofi ADR 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 Sanofi ADR with a short position of Bristol Myers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sanofi ADR and Bristol Myers.
Diversification Opportunities for Sanofi ADR and Bristol Myers
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sanofi and Bristol is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Sanofi ADR 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 Sanofi ADR 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 Sanofi ADR 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 Sanofi ADR i.e., Sanofi ADR and Bristol Myers go up and down completely randomly.
Pair Corralation between Sanofi ADR and Bristol Myers
Considering the 90-day investment horizon Sanofi ADR is expected to generate 1.02 times more return on investment than Bristol Myers. However, Sanofi ADR is 1.02 times more volatile than Bristol Myers Squibb. It trades about 0.14 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 4,851 in Sanofi ADR on November 18, 2024 and sell it today you would earn a total of 599.00 from holding Sanofi ADR or generate 12.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sanofi ADR vs. Bristol Myers Squibb
Performance |
| Timeline |
| Sanofi ADR |
| Bristol Myers Squibb |
Sanofi ADR and Bristol Myers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sanofi ADR and Bristol Myers
The main advantage of trading using opposite Sanofi ADR and Bristol Myers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sanofi ADR 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.| Sanofi ADR vs. AstraZeneca PLC ADR | Sanofi ADR vs. Roche Holding Ltd | Sanofi ADR vs. GlaxoSmithKline PLC ADR | Sanofi ADR vs. Merck Company |
| 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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