Correlation Between Sanofi ADR and Bristol Myers
Can any of the company-specific risk be diversified away by investing in both Sanofi ADR 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 Sanofi ADR and Bristol Myers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sanofi ADR and Bristol Myers Squibb, you can compare the effects of market volatilities on Sanofi ADR 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 Sanofi ADR with a short position of Bristol Myers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sanofi ADR and Bristol Myers.
Diversification Opportunities for Sanofi ADR and Bristol Myers
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sanofi and Bristol is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Sanofi ADR 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 Sanofi ADR 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 Sanofi ADR 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 Sanofi ADR i.e., Sanofi ADR and Bristol Myers go up and down completely randomly.
Pair Corralation between Sanofi ADR and Bristol Myers
Considering the 90-day investment horizon Sanofi ADR is expected to generate 0.85 times more return on investment than Bristol Myers. However, Sanofi ADR is 1.17 times less risky than Bristol Myers. It trades about 0.07 of its potential returns per unit of risk. Bristol Myers Squibb is currently generating about -0.33 per unit of risk. If you would invest 4,780 in Sanofi ADR on February 4, 2024 and sell it today you would earn a total of 121.00 from holding Sanofi ADR or generate 2.53% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Sanofi ADR vs. Bristol Myers Squibb
Performance |
Timeline |
Sanofi ADR |
Bristol Myers Squibb |
Sanofi ADR and Bristol Myers Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sanofi ADR and Bristol Myers
The main advantage of trading using opposite Sanofi ADR and Bristol Myers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sanofi ADR 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.Sanofi ADR vs. Incyte | Sanofi ADR vs. Sarepta Therapeutics | Sanofi ADR vs. ACADIA Pharmaceuticals | Sanofi ADR vs. Viking Therapeutics |
Bristol Myers vs. Incyte | Bristol Myers vs. Sarepta Therapeutics | Bristol Myers vs. ACADIA Pharmaceuticals | Bristol Myers vs. Viking Therapeutics |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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