Correlation Between Bristol Myers and Gilead Sciences

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Bristol Myers and Gilead Sciences 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 Bristol Myers and Gilead Sciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bristol Myers Squibb and Gilead Sciences, you can compare the effects of market volatilities on Bristol Myers and Gilead Sciences 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 Bristol Myers with a short position of Gilead Sciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol Myers and Gilead Sciences.

Diversification Opportunities for Bristol Myers and Gilead Sciences

-0.13
  Correlation Coefficient

Good diversification

The 3 months correlation between Bristol and Gilead is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Bristol-Myers Squibb and Gilead Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gilead Sciences and Bristol Myers 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 Bristol Myers Squibb are associated (or correlated) with Gilead Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gilead Sciences has no effect on the direction of Bristol Myers i.e., Bristol Myers and Gilead Sciences go up and down completely randomly.

Pair Corralation between Bristol Myers and Gilead Sciences

Considering the 90-day investment horizon Bristol Myers Squibb is expected to generate 1.44 times more return on investment than Gilead Sciences. However, Bristol Myers is 1.44 times more volatile than Gilead Sciences. It trades about 0.26 of its potential returns per unit of risk. Gilead Sciences is currently generating about 0.07 per unit of risk. If you would invest  5,051  in Bristol Myers Squibb on December 29, 2023 and sell it today you would earn a total of  372.00  from holding Bristol Myers Squibb or generate 7.36% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Bristol-Myers Squibb  vs.  Gilead Sciences

 Performance 
       Timeline  
Bristol-Myers Squibb 

Risk-Adjusted Performance

7 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Bristol Myers Squibb are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting primary indicators, Bristol Myers may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Gilead Sciences 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Gilead Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Bristol Myers and Gilead Sciences Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bristol Myers and Gilead Sciences

The main advantage of trading using opposite Bristol Myers and Gilead Sciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol Myers position performs unexpectedly, Gilead Sciences 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 Gilead Sciences will offset losses from the drop in Gilead Sciences' long position.
The idea behind Bristol Myers Squibb and Gilead Sciences pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

Other Complementary Tools

Cryptocurrency Center
Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency
Price Ceiling Movement
Calculate and plot Price Ceiling Movement for different equity instruments
Fundamental Analysis
View fundamental data based on most recent published financial statements
Share Portfolio
Track or share privately all of your investments from the convenience of any device
Portfolio Anywhere
Track or share privately all of your investments from the convenience of any device
Competition Analyzer
Analyze and compare many basic indicators for a group of related or unrelated entities