Correlation Between Bausch Health and Lantheus Holdings

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

Diversification Opportunities for Bausch Health and Lantheus Holdings

-0.19

Correlation Coefficient

Bausch Health  Lantheus Holdings

Good diversification

The 3 months correlation between Bausch and Lantheus is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and Lantheus Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lantheus Holdings 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 Lantheus Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lantheus Holdings has no effect on the direction of Bausch Health i.e., Bausch Health and Lantheus Holdings go up and down completely randomly.

Pair Corralation between Bausch Health and Lantheus Holdings

Considering the 90-day investment horizon Bausch Health Companies is expected to generate 0.87 times more return on investment than Lantheus Holdings. However, Bausch Health Companies is 1.15 times less risky than Lantheus Holdings. It trades about 0.16 of its potential returns per unit of risk. Lantheus Holdings is currently generating about -0.05 per unit of risk. If you would invest  607.00  in Bausch Health Companies on August 31, 2024 and sell it today you would earn a total of  205.00  from holding Bausch Health Companies or generate 33.77% 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.  Lantheus Holdings

Bausch Health Companies

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bausch Health Companies are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical indicators, Bausch Health exhibited solid returns over the last few months and may actually be approaching a breakup point.

Lantheus Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lantheus Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Bausch Health and Lantheus Holdings

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

The idea behind Bausch Health Companies and Lantheus Holdings 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.