Correlation Between BKV and Bristol Myers
Can any of the company-specific risk be diversified away by investing in both BKV 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 BKV and Bristol Myers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BKV Corporation and Bristol Myers Squibb, you can compare the effects of market volatilities on BKV 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 BKV with a short position of Bristol Myers. Check out your portfolio center. Please also check ongoing floating volatility patterns of BKV and Bristol Myers.
Diversification Opportunities for BKV and Bristol Myers
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BKV and Bristol is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding BKV Corp. 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 BKV 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 BKV Corporation 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 BKV i.e., BKV and Bristol Myers go up and down completely randomly.
Pair Corralation between BKV and Bristol Myers
Considering the 90-day investment horizon BKV is expected to generate 1.01 times less return on investment than Bristol Myers. But when comparing it to its historical volatility, BKV Corporation is 2.39 times less risky than Bristol Myers. It trades about 0.19 of its potential returns per unit of risk. Bristol Myers Squibb is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 71,800 in Bristol Myers Squibb on September 25, 2024 and sell it today you would earn a total of 28,089 from holding Bristol Myers Squibb or generate 39.12% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 50.81% |
Values | Daily Returns |
BKV Corp. vs. Bristol Myers Squibb
Performance |
Timeline |
BKV Corporation |
Bristol Myers Squibb |
BKV and Bristol Myers Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BKV and Bristol Myers
The main advantage of trading using opposite BKV and Bristol Myers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BKV 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.BKV vs. Antero Resources Corp | BKV vs. Empire Petroleum Corp | BKV vs. Permian Resources | BKV vs. SandRidge Energy |
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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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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