Correlation Between Bristol Myers and 4 Less

Can any of the company-specific risk be diversified away by investing in both Bristol Myers and 4 Less 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 4 Less 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 4 Less Group, you can compare the effects of market volatilities on Bristol Myers and 4 Less 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 4 Less. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol Myers and 4 Less.

Diversification Opportunities for Bristol Myers and 4 Less

-0.7

Correlation Coefficient

Bristol Myers  4 Less

Excellent diversification

The 3 months correlation between Bristol and FLES is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and 4 Less Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 4 Less Group 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 4 Less. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 4 Less Group has no effect on the direction of Bristol Myers i.e., Bristol Myers and 4 Less go up and down completely randomly.

Pair Corralation between Bristol Myers and 4 Less

Considering the 90-day investment horizon Bristol Myers is expected to generate 6.14 times less return on investment than 4 Less. But when comparing it to its historical volatility, Bristol Myers Squibb is 12.32 times less risky than 4 Less. It trades about 0.04 of its potential returns per unit of risk. 4 Less Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1.20  in 4 Less Group on September 25, 2024 and sell it today you would lose (1.18) from holding 4 Less Group or give up 98.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.6%
Values	Daily Returns

Bristol Myers Squibb  vs.  4 Less Group

Bristol Myers Squibb

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bristol Myers Squibb are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady primary indicators, Bristol Myers showed solid returns over the last few months and may actually be approaching a breakup point.

4 Less Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in 4 Less Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent technical and fundamental indicators, 4 Less unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bristol Myers and 4 Less

The main advantage of trading using opposite Bristol Myers and 4 Less positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol Myers position performs unexpectedly, 4 Less 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 4 Less will offset losses from the drop in 4 Less' long position.

The idea behind Bristol Myers Squibb and 4 Less Group 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.