Correlation Between Teva Pharma and Bristol Myers
Can any of the company-specific risk be diversified away by investing in both Teva Pharma 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 Teva Pharma and Bristol Myers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teva Pharma Industries and Bristol Myers Squibb, you can compare the effects of market volatilities on Teva Pharma 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 Teva Pharma with a short position of Bristol Myers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teva Pharma and Bristol Myers.
Diversification Opportunities for Teva Pharma and Bristol Myers
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Teva and Bristol is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Teva Pharma Industries 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 Teva Pharma 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 Teva Pharma Industries 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 Teva Pharma i.e., Teva Pharma and Bristol Myers go up and down completely randomly.
Pair Corralation between Teva Pharma and Bristol Myers
Given the investment horizon of 90 days Teva Pharma Industries is expected to under-perform the Bristol Myers. But the stock apears to be less risky and, when comparing its historical volatility, Teva Pharma Industries is 1.53 times less risky than Bristol Myers. The stock trades about -0.24 of its potential returns per unit of risk. The Bristol Myers Squibb is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 5,250 in Bristol Myers Squibb on August 30, 2024 and sell it today you would earn a total of 677.00 from holding Bristol Myers Squibb or generate 12.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teva Pharma Industries vs. Bristol Myers Squibb
Performance |
| Timeline |
| Teva Pharma Industries |
| Bristol Myers Squibb |
Teva Pharma and Bristol Myers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teva Pharma and Bristol Myers
The main advantage of trading using opposite Teva Pharma and Bristol Myers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teva Pharma 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.| Teva Pharma vs. Haleon plc | Teva Pharma vs. Bausch Health Companies | Teva Pharma vs. Zoetis Inc | Teva Pharma vs. Takeda Pharmaceutical Co |
| Bristol Myers vs. Emergent Biosolutions | Bristol Myers vs. Bausch Health Companies | Bristol Myers vs. Neurocrine Biosciences | Bristol Myers vs. Teva Pharma Industries |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |