Correlation Between Evolus and Bausch Health

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

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

Diversification Opportunities for Evolus and Bausch Health

-0.13

Correlation Coefficient

Evolus  Bausch Health

Good diversification

The 3 months correlation between Evolus and Bausch is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Evolus Inc and Bausch Health Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bausch Health Companies and Evolus 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 Evolus Inc are associated (or correlated) with Bausch Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bausch Health Companies has no effect on the direction of Evolus i.e., Evolus and Bausch Health go up and down completely randomly.

Pair Corralation between Evolus and Bausch Health

Given the investment horizon of 90 days Evolus Inc is expected to under-perform the Bausch Health. In addition to that, Evolus is 1.11 times more volatile than Bausch Health Companies. It trades about -0.04 of its total potential returns per unit of risk. Bausch Health Companies is currently generating about 0.17 per unit of volatility. If you would invest  607.00  in Bausch Health Companies on September 2, 2024 and sell it today you would earn a total of  230.00  from holding Bausch Health Companies or generate 37.89% return on investment over 90 days.

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

Evolus Inc  vs.  Bausch Health Companies

Evolus Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Bausch Health Companies

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bausch Health Companies are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical indicators, Bausch Health exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Evolus and Bausch Health

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

The idea behind Evolus Inc and Bausch Health Companies 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.