Correlation Between Bausch Health and Sixt Leasing

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

Diversification Opportunities for Bausch Health and Sixt Leasing

-0.57

Correlation Coefficient

Bausch Health  Sixt Leasing

Excellent diversification

The 3 months correlation between Bausch and Sixt is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and Sixt Leasing SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sixt Leasing SE 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 Sixt Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sixt Leasing SE has no effect on the direction of Bausch Health i.e., Bausch Health and Sixt Leasing go up and down completely randomly.

Pair Corralation between Bausch Health and Sixt Leasing

Assuming the 90 days horizon Bausch Health Companies is expected to generate 1.8 times more return on investment than Sixt Leasing. However, Bausch Health is 1.8 times more volatile than Sixt Leasing SE. It trades about 0.22 of its potential returns per unit of risk. Sixt Leasing SE is currently generating about -0.1 per unit of risk. If you would invest  528.00  in Bausch Health Companies on September 2, 2024 and sell it today you would earn a total of  255.00  from holding Bausch Health Companies or generate 48.3% return on investment over 90 days.

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

Bausch Health Companies  vs.  Sixt Leasing SE

Bausch Health Companies

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bausch Health Companies are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Bausch Health reported solid returns over the last few months and may actually be approaching a breakup point.

Sixt Leasing SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sixt Leasing SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Bausch Health and Sixt Leasing

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

The idea behind Bausch Health Companies and Sixt Leasing SE 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.