Correlation Between Global X and Bristol Myers
Can any of the company-specific risk be diversified away by investing in both Global X 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 Global X and Bristol Myers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X MSCI and Bristol Myers Squibb, you can compare the effects of market volatilities on Global X 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 Global X with a short position of Bristol Myers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Bristol Myers.
Diversification Opportunities for Global X and Bristol Myers
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Global and Bristol is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Global X MSCI 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 Global X 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 Global X MSCI 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 Global X i.e., Global X and Bristol Myers go up and down completely randomly.
Pair Corralation between Global X and Bristol Myers
Given the investment horizon of 90 days Global X MSCI is expected to generate 1.12 times more return on investment than Bristol Myers. However, Global X is 1.12 times more volatile than Bristol Myers Squibb. It trades about 0.16 of its potential returns per unit of risk. Bristol Myers Squibb is currently generating about -0.2 per unit of risk. If you would invest 1,695 in Global X MSCI on January 25, 2024 and sell it today you would earn a total of 78.00 from holding Global X MSCI or generate 4.6% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Global X MSCI vs. Bristol Myers Squibb
Performance |
Timeline |
Global X MSCI |
Bristol Myers Squibb |
Global X and Bristol Myers Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Global X and Bristol Myers
The main advantage of trading using opposite Global X and Bristol Myers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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.Global X vs. iShares MSCI India | Global X vs. HUMANA INC | Global X vs. Aquagold International | Global X vs. Morningstar Unconstrained Allocation |
Bristol Myers vs. AbbVie Inc | Bristol Myers vs. Merck Company | Bristol Myers vs. Gilead Sciences | Bristol Myers vs. Johnson Johnson |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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