Correlation Between Bausch Health and New Found

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

Diversification Opportunities for Bausch Health and New Found

-0.03

Correlation Coefficient

Bausch Health  New Found

Good diversification

The 3 months correlation between Bausch and New is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and New Found Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Found 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 New Found. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Found Gold has no effect on the direction of Bausch Health i.e., Bausch Health and New Found go up and down completely randomly.

Pair Corralation between Bausch Health and New Found

Assuming the 90 days trading horizon Bausch Health Companies is expected to under-perform the New Found. In addition to that, Bausch Health is 1.12 times more volatile than New Found Gold. It trades about -0.01 of its total potential returns per unit of risk. New Found Gold is currently generating about 0.05 per unit of volatility. If you would invest  244.00  in New Found Gold on December 4, 2024 and sell it today you would earn a total of  6.00  from holding New Found Gold or generate 2.46% 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.  New Found Gold

Bausch Health Companies

Risk-Adjusted Performance

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 latest unfluctuating performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

New Found Gold

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in New Found Gold are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, New Found may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Bausch Health and New Found

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

The idea behind Bausch Health Companies and New Found 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.