Correlation Between Tesla and Bristol Myer

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

Diversification Opportunities for Tesla and Bristol Myer

-0.82
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Tesla and Bristol is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Bristol Myer Squi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bristol Myer Squi and Tesla 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 Tesla Inc are associated (or correlated) with Bristol Myer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bristol Myer Squi has no effect on the direction of Tesla i.e., Tesla and Bristol Myer go up and down completely randomly.

Pair Corralation between Tesla and Bristol Myer

Given the investment horizon of 90 days Tesla Inc is expected to under-perform the Bristol Myer. In addition to that, Tesla is 2.02 times more volatile than Bristol Myer Squi. It trades about -0.02 of its total potential returns per unit of risk. Bristol Myer Squi is currently generating about 0.0 per unit of volatility. If you would invest  120,200  in Bristol Myer Squi on July 4, 2022 and sell it today you would lose (200.00)  from holding Bristol Myer Squi or give up 0.17% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy95.45%
ValuesDaily Returns

Tesla Inc  vs.  Bristol Myer Squi

 Performance (%) 
       Timeline  
Tesla Inc 
Tesla Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Tesla Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting essential indicators, Tesla sustained solid returns over the last few months and may actually be approaching a breakup point.

Tesla Price Channel

Bristol Myer Squi 
Bristol Performance
0 of 100
Over the last 90 days Bristol Myer Squi has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm insiders.

Bristol Price Channel

Tesla and Bristol Myer Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Tesla and Bristol Myer

The main advantage of trading using opposite Tesla and Bristol Myer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla position performs unexpectedly, Bristol Myer 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 Myer will offset losses from the drop in Bristol Myer's long position.
Tesla vs. Amazon Inc
The idea behind Tesla Inc and Bristol Myer Squi 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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