Correlation Between Select Sector and Bristol Myers
Can any of the company-specific risk be diversified away by investing in both Select Sector 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 Select Sector and Bristol Myers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Select Sector and Bristol Myers Squibb, you can compare the effects of market volatilities on Select Sector 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 Select Sector with a short position of Bristol Myers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Sector and Bristol Myers.
Diversification Opportunities for Select Sector and Bristol Myers
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Select and Bristol is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding The Select Sector 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 Select Sector 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 The Select Sector 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 Select Sector i.e., Select Sector and Bristol Myers go up and down completely randomly.
Pair Corralation between Select Sector and Bristol Myers
Assuming the 90 days trading horizon The Select Sector is expected to generate 0.94 times more return on investment than Bristol Myers. However, The Select Sector is 1.06 times less risky than Bristol Myers. It trades about 0.05 of its potential returns per unit of risk. Bristol Myers Squibb is currently generating about 0.02 per unit of risk. If you would invest 116,421 in The Select Sector on November 28, 2024 and sell it today you would earn a total of 46,174 from holding The Select Sector or generate 39.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Select Sector vs. Bristol Myers Squibb
Performance |
| Timeline |
| Select Sector |
| Bristol Myers Squibb |
Select Sector and Bristol Myers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Select Sector and Bristol Myers
The main advantage of trading using opposite Select Sector and Bristol Myers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Sector 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.| Select Sector vs. The Select Sector | Select Sector vs. The Select Sector | Select Sector vs. The Select Sector | Select Sector vs. The Select Sector |
| Bristol Myers vs. Lloyds Banking Group | Bristol Myers vs. Desarrolladora Homex SAB | Bristol Myers vs. United States Steel | Bristol Myers vs. Grupo Hotelero Santa |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |