Correlation Between Disney and Bristol Myers
Can any of the company-specific risk be diversified away by investing in both Disney 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 Disney and Bristol Myers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and Bristol Myers Squibb, you can compare the effects of market volatilities on Disney 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 Disney with a short position of Bristol Myers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and Bristol Myers.
Diversification Opportunities for Disney and Bristol Myers
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Disney and Bristol is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney 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 Disney 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 Walt Disney 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 Disney i.e., Disney and Bristol Myers go up and down completely randomly.
Pair Corralation between Disney and Bristol Myers
Considering the 90-day investment horizon Walt Disney is expected to generate 0.91 times more return on investment than Bristol Myers. However, Walt Disney is 1.1 times less risky than Bristol Myers. It trades about 0.41 of its potential returns per unit of risk. Bristol Myers Squibb is currently generating about 0.24 per unit of risk. If you would invest 11,080 in Walt Disney on December 30, 2023 and sell it today you would earn a total of 1,156 from holding Walt Disney or generate 10.43% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Walt Disney vs. Bristol-Myers Squibb
Performance |
Timeline |
Walt Disney |
Bristol-Myers Squibb |
Disney and Bristol Myers Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Disney and Bristol Myers
The main advantage of trading using opposite Disney and Bristol Myers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney 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.Disney vs. Anghami Warrants | Disney vs. Alliance Entertainment Holding | Disney vs. News Corp A | Disney vs. Nexstar Broadcasting Group |
Bristol Myers vs. Chevron Corp | Bristol Myers vs. McDonalds | Bristol Myers vs. Bank Of America | Bristol Myers vs. Alcoa Corp |
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.
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