Correlation Between Bausch Health and LIFE +
Can any of the company-specific risk be diversified away by investing in both Bausch Health and LIFE + 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 LIFE + 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 LIFE BANC SPLIT, you can compare the effects of market volatilities on Bausch Health and LIFE + 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 LIFE +. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and LIFE +.
Diversification Opportunities for Bausch Health and LIFE +
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bausch and LIFE is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and LIFE BANC SPLIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIFE BANC SPLIT 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 LIFE +. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIFE BANC SPLIT has no effect on the direction of Bausch Health i.e., Bausch Health and LIFE + go up and down completely randomly.
Pair Corralation between Bausch Health and LIFE +
Assuming the 90 days horizon Bausch Health Companies is expected to under-perform the LIFE +. But the stock apears to be less risky and, when comparing its historical volatility, Bausch Health Companies is 1.01 times less risky than LIFE +. The stock trades about -0.05 of its potential returns per unit of risk. The LIFE BANC SPLIT is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 579.00 in LIFE BANC SPLIT on December 28, 2024 and sell it today you would lose (34.00) from holding LIFE BANC SPLIT or give up 5.87% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Bausch Health Companies vs. LIFE BANC SPLIT
Performance |
Timeline |
Bausch Health Companies |
LIFE BANC SPLIT |
Bausch Health and LIFE + Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bausch Health and LIFE +
The main advantage of trading using opposite Bausch Health and LIFE + positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, LIFE + 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 LIFE + will offset losses from the drop in LIFE +'s long position.Bausch Health vs. Zoetis Inc | Bausch Health vs. Takeda Pharmaceutical | Bausch Health vs. Eisai Co | Bausch Health vs. Shionogi Co |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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