Correlation Between Bristol Myers and Dundee Precious

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

Diversification Opportunities for Bristol Myers and Dundee Precious

-0.72

Correlation Coefficient

Bristol Myers  Dundee Precious

Pay attention - limited upside

The 3 months correlation between Bristol and Dundee is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Dundee Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dundee Precious Metals 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 Dundee Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dundee Precious Metals has no effect on the direction of Bristol Myers i.e., Bristol Myers and Dundee Precious go up and down completely randomly.

Pair Corralation between Bristol Myers and Dundee Precious

Assuming the 90 days horizon Bristol Myers Squibb is expected to under-perform the Dundee Precious. In addition to that, Bristol Myers is 1.91 times more volatile than Dundee Precious Metals. It trades about 0.0 of its total potential returns per unit of risk. Dundee Precious Metals is currently generating about 0.07 per unit of volatility. If you would invest  476.00  in Dundee Precious Metals on September 13, 2024 and sell it today you would earn a total of  475.00  from holding Dundee Precious Metals or generate 99.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	46.56%
Values	Daily Returns

Bristol Myers Squibb  vs.  Dundee Precious Metals

Bristol Myers Squibb

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bristol Myers Squibb are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile primary indicators, Bristol Myers reported solid returns over the last few months and may actually be approaching a breakup point.

Dundee Precious Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dundee Precious Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Dundee Precious is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Bristol Myers and Dundee Precious

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

The idea behind Bristol Myers Squibb and Dundee Precious Metals 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.