Correlation Between Bausch Health and Moderna

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

Diversification Opportunities for Bausch Health and Moderna

0.68

Correlation Coefficient

Bausch Health  Moderna

Poor diversification

The 3 months correlation between Bausch and Moderna is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and Moderna in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moderna 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 Moderna. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moderna has no effect on the direction of Bausch Health i.e., Bausch Health and Moderna go up and down completely randomly.

Pair Corralation between Bausch Health and Moderna

Considering the 90-day investment horizon Bausch Health Companies is expected to under-perform the Moderna. But the stock apears to be less risky and, when comparing its historical volatility, Bausch Health Companies is 1.86 times less risky than Moderna. The stock trades about -0.09 of its potential returns per unit of risk. The Moderna is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  3,938  in Moderna on December 28, 2024 and sell it today you would lose (826.00) from holding Moderna or give up 20.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Bausch Health Companies  vs.  Moderna

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 uncertain performance in the last few months, the Stock's technical indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Moderna

Risk-Adjusted Performance

Very Weak

Over the last 90 days Moderna has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Bausch Health and Moderna

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

The idea behind Bausch Health Companies and Moderna 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 Stocks Directory module to find actively traded stocks across global markets.