Correlation Between Ballys Corp and Bausch

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

By analyzing existing cross correlation between Ballys Corp and Bausch Health Companies, you can compare the effects of market volatilities on Ballys Corp and Bausch 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 Ballys Corp with a short position of Bausch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ballys Corp and Bausch.

Diversification Opportunities for Ballys Corp and Bausch

0.58

Correlation Coefficient

Ballys Corp  Bausch

Very weak diversification

The 3 months correlation between Ballys and Bausch is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Ballys Corp and Bausch Health Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bausch Health Companies and Ballys Corp 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 Ballys Corp are associated (or correlated) with Bausch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bausch Health Companies has no effect on the direction of Ballys Corp i.e., Ballys Corp and Bausch go up and down completely randomly.

Pair Corralation between Ballys Corp and Bausch

Given the investment horizon of 90 days Ballys Corp is expected to generate 169.3 times less return on investment than Bausch. But when comparing it to its historical volatility, Ballys Corp is 20.92 times less risky than Bausch. It trades about 0.01 of its potential returns per unit of risk. Bausch Health Companies is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  4,515  in Bausch Health Companies on October 23, 2024 and sell it today you would lose (209.00) from holding Bausch Health Companies or give up 4.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	41.7%
Values	Daily Returns

Ballys Corp  vs.  Bausch Health Companies

Ballys Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ballys Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong essential indicators, Ballys Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bausch Health Companies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bausch Health Companies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for Bausch Health Companies investors.

Pair Trading with Ballys Corp and Bausch

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

The idea behind Ballys Corp and Bausch Health Companies 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.