Correlation Between Hostess Brands and Bristol Myers

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Can any of the company-specific risk be diversified away by investing in both Hostess Brands 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 Hostess Brands and Bristol Myers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hostess Brands and Bristol Myers Squibb, you can compare the effects of market volatilities on Hostess Brands 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 Hostess Brands with a short position of Bristol Myers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hostess Brands and Bristol Myers.

Diversification Opportunities for Hostess Brands and Bristol Myers

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Hostess and Bristol is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Hostess Brands 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 Hostess Brands 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 Hostess Brands 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 Hostess Brands i.e., Hostess Brands and Bristol Myers go up and down completely randomly.

Pair Corralation between Hostess Brands and Bristol Myers

If you would invest (100.00) in Bristol Myers Squibb on December 29, 2023 and sell it today you would earn a total of  100.00  from holding Bristol Myers Squibb or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Hostess Brands  vs.  Bristol-Myers Squibb

 Performance 
       Timeline  
Hostess Brands 

Risk-Adjusted Performance

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Over the last 90 days Hostess Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward-looking signals, Hostess Brands is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
Bristol-Myers Squibb 

Risk-Adjusted Performance

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Low
 
High
Very Weak
Over the last 90 days Bristol Myers Squibb has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable primary indicators, Bristol Myers is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Hostess Brands and Bristol Myers Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Hostess Brands and Bristol Myers

The main advantage of trading using opposite Hostess Brands and Bristol Myers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hostess Brands 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 Hostess Brands 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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