Correlation Between SentinelOne and Bristol Myers

Can any of the company-specific risk be diversified away by investing in both SentinelOne 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 SentinelOne and Bristol Myers into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SentinelOne and Bristol Myers Squibb, you can compare the effects of market volatilities on SentinelOne 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 SentinelOne with a short position of Bristol Myers. Check out your portfolio center. Please also check ongoing floating volatility patterns of SentinelOne and Bristol Myers.

Diversification Opportunities for SentinelOne and Bristol Myers

-0.44

Correlation Coefficient

SentinelOne  Bristol Myers

Very good diversification

The 3 months correlation between SentinelOne and Bristol is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne 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 SentinelOne 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 SentinelOne 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 SentinelOne i.e., SentinelOne and Bristol Myers go up and down completely randomly.

Pair Corralation between SentinelOne and Bristol Myers

Taking into account the 90-day investment horizon SentinelOne is expected to under-perform the Bristol Myers. In addition to that, SentinelOne is 1.77 times more volatile than Bristol Myers Squibb. It trades about -0.25 of its total potential returns per unit of risk. Bristol Myers Squibb is currently generating about -0.2 per unit of volatility. If you would invest  5,100  in Bristol Myers Squibb on January 17, 2024 and sell it today you would lose (249.00) from holding Bristol Myers Squibb or give up 4.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

SentinelOne  vs.  Bristol Myers Squibb

SentinelOne

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SentinelOne has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Bristol Myers Squibb

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bristol Myers Squibb has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, Bristol Myers is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SentinelOne and Bristol Myers

The main advantage of trading using opposite SentinelOne and Bristol Myers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SentinelOne 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.

The idea behind SentinelOne and Bristol Myers Squibb 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.

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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.