Correlation Between Bausch Health and Vicinity
Can any of the company-specific risk be diversified away by investing in both Bausch Health and Vicinity 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 Vicinity 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 Vicinity Motor Corp, you can compare the effects of market volatilities on Bausch Health and Vicinity 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 Vicinity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and Vicinity.
Diversification Opportunities for Bausch Health and Vicinity
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bausch and Vicinity is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and Vicinity Motor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vicinity Motor Corp 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 Vicinity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vicinity Motor Corp has no effect on the direction of Bausch Health i.e., Bausch Health and Vicinity go up and down completely randomly.
Pair Corralation between Bausch Health and Vicinity
Assuming the 90 days trading horizon Bausch Health Companies is expected to generate 0.45 times more return on investment than Vicinity. However, Bausch Health Companies is 2.23 times less risky than Vicinity. It trades about 0.16 of its potential returns per unit of risk. Vicinity Motor Corp is currently generating about -0.16 per unit of risk. If you would invest 841.00 in Bausch Health Companies on September 9, 2024 and sell it today you would earn a total of 313.00 from holding Bausch Health Companies or generate 37.22% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 98.46% |
Values | Daily Returns |
Bausch Health Companies vs. Vicinity Motor Corp
Performance |
Timeline |
Bausch Health Companies |
Vicinity Motor Corp |
Bausch Health and Vicinity Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bausch Health and Vicinity
The main advantage of trading using opposite Bausch Health and Vicinity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, Vicinity 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 Vicinity will offset losses from the drop in Vicinity'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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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