Correlation Between Brightsphere Investment and Bristol Myers

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

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

Diversification Opportunities for Brightsphere Investment and Bristol Myers

0.82

Correlation Coefficient

Brightsphere Investment  Bristol Myers

Very poor diversification

The 3 months correlation between Brightsphere and Bristol is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Brightsphere Investment Group 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 Brightsphere Investment 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 Brightsphere Investment Group 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 Brightsphere Investment i.e., Brightsphere Investment and Bristol Myers go up and down completely randomly.

Pair Corralation between Brightsphere Investment and Bristol Myers

Given the investment horizon of 90 days Brightsphere Investment Group is expected to generate 0.44 times more return on investment than Bristol Myers. However, Brightsphere Investment Group is 2.27 times less risky than Bristol Myers. It trades about 0.04 of its potential returns per unit of risk. Bristol Myers Squibb is currently generating about 0.0 per unit of risk. If you would invest  2,146  in Brightsphere Investment Group on September 24, 2024 and sell it today you would earn a total of  555.00  from holding Brightsphere Investment Group or generate 25.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	61.76%
Values	Daily Returns

Brightsphere Investment Group  vs.  Bristol Myers Squibb

Brightsphere Investment

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Brightsphere Investment Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, Brightsphere Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Bristol Myers Squibb

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bristol Myers Squibb are ranked lower than 12 (%) 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.

Pair Trading with Brightsphere Investment and Bristol Myers

The main advantage of trading using opposite Brightsphere Investment and Bristol Myers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brightsphere Investment 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 Brightsphere Investment Group 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.