Correlation Between Bristol Myer and Amazon

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

Diversification Opportunities for Bristol Myer and Amazon

-0.52
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Bristol and Amazon is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myer Squi and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and Bristol Myer 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 Myer Squi are associated (or correlated) with Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of Bristol Myer i.e., Bristol Myer and Amazon go up and down completely randomly.

Pair Corralation between Bristol Myer and Amazon

Assuming the 90 days horizon Bristol Myer Squi is expected to generate 2.88 times more return on investment than Amazon. However, Bristol Myer is 2.88 times more volatile than Amazon Inc. It trades about 0.02 of its potential returns per unit of risk. Amazon Inc is currently generating about -0.06 per unit of risk. If you would invest  199,930  in Bristol Myer Squi on September 1, 2022 and sell it today you would lose (71,230)  from holding Bristol Myer Squi or give up 35.63% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy99.6%
ValuesDaily Returns

Bristol Myer Squi  vs.  Amazon Inc

 Performance (%) 
       Timeline  
Bristol Myer Squi 
Bristol Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Bristol Myer Squi are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Bristol Myer displayed solid returns over the last few months and may actually be approaching a breakup point.

Bristol Price Channel

Amazon Inc 
Amazon Performance
0 of 100
Over the last 90 days Amazon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in December 2022. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Amazon Price Channel

Bristol Myer and Amazon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bristol Myer and Amazon

The main advantage of trading using opposite Bristol Myer and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol Myer position performs unexpectedly, Amazon 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 Amazon will offset losses from the drop in Amazon's long position.
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The idea behind Bristol Myer Squi and Amazon Inc 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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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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