Correlation Between Bausch Health and Xeris Pharmaceuticals

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

Diversification Opportunities for Bausch Health and Xeris Pharmaceuticals

-0.2

Correlation Coefficient

Bausch Health  Xeris Pharmaceuticals

Good diversification

The 3 months correlation between Bausch and Xeris is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and Xeris Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xeris Pharmaceuticals 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 Xeris Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xeris Pharmaceuticals has no effect on the direction of Bausch Health i.e., Bausch Health and Xeris Pharmaceuticals go up and down completely randomly.

Pair Corralation between Bausch Health and Xeris Pharmaceuticals

Considering the 90-day investment horizon Bausch Health is expected to generate 2.09 times less return on investment than Xeris Pharmaceuticals. In addition to that, Bausch Health is 1.12 times more volatile than Xeris Pharmaceuticals. It trades about 0.01 of its total potential returns per unit of risk. Xeris Pharmaceuticals is currently generating about 0.03 per unit of volatility. If you would invest  320.00  in Xeris Pharmaceuticals on October 25, 2024 and sell it today you would earn a total of  7.00  from holding Xeris Pharmaceuticals or generate 2.19% 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.  Xeris Pharmaceuticals

Bausch Health Companies

Risk-Adjusted Performance

0 of 100

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 rather sound technical indicators, Bausch Health is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Xeris Pharmaceuticals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Xeris Pharmaceuticals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Xeris Pharmaceuticals is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Bausch Health and Xeris Pharmaceuticals

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

The idea behind Bausch Health Companies and Xeris Pharmaceuticals 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.

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 Transaction History module to view history of all your transactions and understand their impact on performance.