Correlation Between Bausch Health and First Majestic
Can any of the company-specific risk be diversified away by investing in both Bausch Health and First Majestic 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 Bausch Health and First Majestic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bausch Health Companies and First Majestic Silver, you can compare the effects of market volatilities on Bausch Health and First Majestic 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 Bausch Health with a short position of First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and First Majestic.
Diversification Opportunities for Bausch Health and First Majestic
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bausch and First is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and First Majestic Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Majestic Silver and Bausch Health 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 Bausch Health Companies are associated (or correlated) with First Majestic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Majestic Silver has no effect on the direction of Bausch Health i.e., Bausch Health and First Majestic go up and down completely randomly.
Pair Corralation between Bausch Health and First Majestic
Assuming the 90 days trading horizon Bausch Health Companies is expected to under-perform the First Majestic. But the stock apears to be less risky and, when comparing its historical volatility, Bausch Health Companies is 1.34 times less risky than First Majestic. The stock trades about -0.08 of its potential returns per unit of risk. The First Majestic Silver is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 776.00 in First Majestic Silver on December 29, 2024 and sell it today you would earn a total of 190.00 from holding First Majestic Silver or generate 24.48% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Bausch Health Companies vs. First Majestic Silver
Performance |
Timeline |
Bausch Health Companies |
First Majestic Silver |
Bausch Health and First Majestic Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bausch Health and First Majestic
The main advantage of trading using opposite Bausch Health and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, First Majestic 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 First Majestic will offset losses from the drop in First Majestic's long position.Bausch Health vs. HLS Therapeutics | Bausch Health vs. Cipher Pharmaceuticals | Bausch Health vs. Medicenna Therapeutics Corp | Bausch Health vs. Eupraxia Pharmaceuticals |
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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 the Equity Valuation module to check real value of public entities based on technical and fundamental data.
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