Correlation Between Bristol Myers and Citi Trends

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

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

Diversification Opportunities for Bristol Myers and Citi Trends

0.39

Correlation Coefficient

Bristol Myers  Citi Trends

Weak diversification

The 3 months correlation between Bristol and Citi is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Citi Trends in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citi Trends and Bristol Myers 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 Myers Squibb are associated (or correlated) with Citi Trends. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citi Trends has no effect on the direction of Bristol Myers i.e., Bristol Myers and Citi Trends go up and down completely randomly.

Pair Corralation between Bristol Myers and Citi Trends

Considering the 90-day investment horizon Bristol Myers Squibb is expected to under-perform the Citi Trends. But the stock apears to be less risky and, when comparing its historical volatility, Bristol Myers Squibb is 3.56 times less risky than Citi Trends. The stock trades about -0.09 of its potential returns per unit of risk. The Citi Trends is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  1,957  in Citi Trends on September 25, 2024 and sell it today you would earn a total of  566.00  from holding Citi Trends or generate 28.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Bristol Myers Squibb  vs.  Citi Trends

Bristol Myers Squibb

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bristol Myers Squibb are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady primary indicators, Bristol Myers showed solid returns over the last few months and may actually be approaching a breakup point.

Citi Trends

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citi Trends are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Citi Trends displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bristol Myers and Citi Trends

The main advantage of trading using opposite Bristol Myers and Citi Trends positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol Myers position performs unexpectedly, Citi Trends 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 Citi Trends will offset losses from the drop in Citi Trends' long position.

The idea behind Bristol Myers Squibb and Citi Trends 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.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.