Correlation Between Bausch Health and Avino Silver

Can any of the company-specific risk be diversified away by investing in both Bausch Health and Avino Silver 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 Avino Silver 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 Avino Silver Gold, you can compare the effects of market volatilities on Bausch Health and Avino Silver 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 Avino Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and Avino Silver.

Diversification Opportunities for Bausch Health and Avino Silver

0.16

Correlation Coefficient

Bausch Health  Avino Silver

Average diversification

The 3 months correlation between Bausch and Avino is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and Avino Silver Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avino Silver Gold 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 Avino Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avino Silver Gold has no effect on the direction of Bausch Health i.e., Bausch Health and Avino Silver go up and down completely randomly.

Pair Corralation between Bausch Health and Avino Silver

Assuming the 90 days trading horizon Bausch Health Companies is expected to generate 0.92 times more return on investment than Avino Silver. However, Bausch Health Companies is 1.09 times less risky than Avino Silver. It trades about 0.05 of its potential returns per unit of risk. Avino Silver Gold is currently generating about 0.03 per unit of risk. If you would invest  934.00  in Bausch Health Companies on September 22, 2024 and sell it today you would earn a total of  137.00  from holding Bausch Health Companies or generate 14.67% return on investment over 90 days.

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

Bausch Health Companies  vs.  Avino Silver Gold

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. In spite of very healthy fundamental indicators, Bausch Health is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Avino Silver Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avino Silver Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Avino Silver is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Bausch Health and Avino Silver

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

The idea behind Bausch Health Companies and Avino Silver Gold 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.