Correlation Between Bausch Health and Opus One
Can any of the company-specific risk be diversified away by investing in both Bausch Health and Opus One 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 Opus One 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 Opus One Resources, you can compare the effects of market volatilities on Bausch Health and Opus One 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 Opus One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and Opus One.
Diversification Opportunities for Bausch Health and Opus One
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bausch and Opus is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and Opus One Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Opus One Resources 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 Opus One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Opus One Resources has no effect on the direction of Bausch Health i.e., Bausch Health and Opus One go up and down completely randomly.
Pair Corralation between Bausch Health and Opus One
Assuming the 90 days trading horizon Bausch Health is expected to generate 5.79 times less return on investment than Opus One. But when comparing it to its historical volatility, Bausch Health Companies is 2.88 times less risky than Opus One. It trades about 0.01 of its potential returns per unit of risk. Opus One Resources is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 5.00 in Opus One Resources on October 25, 2024 and sell it today you would lose (0.50) from holding Opus One Resources or give up 10.0% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Bausch Health Companies vs. Opus One Resources
Performance |
Timeline |
Bausch Health Companies |
Opus One Resources |
Bausch Health and Opus One Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bausch Health and Opus One
The main advantage of trading using opposite Bausch Health and Opus One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, Opus One 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 Opus One will offset losses from the drop in Opus One's long position.Bausch Health vs. Gildan Activewear | Bausch Health vs. Open Text Corp | Bausch Health vs. Waste Connections | Bausch Health vs. CCL Industries |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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