Correlation Between Bausch Health and Bce

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

Diversification Opportunities for Bausch Health and Bce

-0.51

Correlation Coefficient

Bausch Health  Bce

Excellent diversification

The 3 months correlation between Bausch and Bce is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and Bce Inc Pref in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bce Inc Pref 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 Bce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bce Inc Pref has no effect on the direction of Bausch Health i.e., Bausch Health and Bce go up and down completely randomly.

Pair Corralation between Bausch Health and Bce

Assuming the 90 days trading horizon Bausch Health is expected to generate 34.6 times less return on investment than Bce. In addition to that, Bausch Health is 3.68 times more volatile than Bce Inc Pref. It trades about 0.0 of its total potential returns per unit of risk. Bce Inc Pref is currently generating about 0.19 per unit of volatility. If you would invest  1,531  in Bce Inc Pref on October 23, 2024 and sell it today you would earn a total of  162.00  from holding Bce Inc Pref or generate 10.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Bausch Health Companies  vs.  Bce Inc Pref

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.

Bce Inc Pref

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bce Inc Pref are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal technical and fundamental indicators, Bce may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Bausch Health and Bce

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

The idea behind Bausch Health Companies and Bce Inc Pref 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..