Correlation Between Bausch Lomb and Icon Energy

Can any of the company-specific risk be diversified away by investing in both Bausch Lomb and Icon Energy 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 Lomb and Icon Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bausch Lomb Corp and Icon Energy Corp, you can compare the effects of market volatilities on Bausch Lomb and Icon Energy 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 Lomb with a short position of Icon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Lomb and Icon Energy.

Diversification Opportunities for Bausch Lomb and Icon Energy

-0.04

Correlation Coefficient

Bausch Lomb  Icon Energy

Good diversification

The 3 months correlation between Bausch and Icon is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Lomb Corp and Icon Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Energy Corp and Bausch Lomb 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 Lomb Corp are associated (or correlated) with Icon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Energy Corp has no effect on the direction of Bausch Lomb i.e., Bausch Lomb and Icon Energy go up and down completely randomly.

Pair Corralation between Bausch Lomb and Icon Energy

Given the investment horizon of 90 days Bausch Lomb Corp is expected to under-perform the Icon Energy. In addition to that, Bausch Lomb is 1.05 times more volatile than Icon Energy Corp. It trades about -0.17 of its total potential returns per unit of risk. Icon Energy Corp is currently generating about -0.04 per unit of volatility. If you would invest  227.00  in Icon Energy Corp on October 6, 2024 and sell it today you would lose (7.00) from holding Icon Energy Corp or give up 3.08% of portfolio value over 90 days.

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

Bausch Lomb Corp  vs.  Icon Energy Corp

Bausch Lomb Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bausch Lomb Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Bausch Lomb is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Icon Energy Corp

Risk-Adjusted Performance

4 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Icon Energy Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Icon Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bausch Lomb and Icon Energy

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

The idea behind Bausch Lomb Corp and Icon Energy Corp 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.