Correlation Between IShares Blockchain and Bausch

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

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

Diversification Opportunities for IShares Blockchain and Bausch

0.79

Correlation Coefficient

IShares Blockchain  Bausch

Poor diversification

The 3 months correlation between IShares and Bausch is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding iShares Blockchain and 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 IShares Blockchain 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 iShares Blockchain and are associated (or correlated) with Bausch. 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 IShares Blockchain i.e., IShares Blockchain and Bausch go up and down completely randomly.

Pair Corralation between IShares Blockchain and Bausch

Given the investment horizon of 90 days iShares Blockchain and is expected to generate 3.09 times more return on investment than Bausch. However, IShares Blockchain is 3.09 times more volatile than Bausch Health Companies. It trades about 0.08 of its potential returns per unit of risk. Bausch Health Companies is currently generating about 0.11 per unit of risk. If you would invest  3,258  in iShares Blockchain and on September 23, 2024 and sell it today you would earn a total of  473.00  from holding iShares Blockchain and or generate 14.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	76.74%
Values	Daily Returns

iShares Blockchain and  vs.  Bausch Health Companies

iShares Blockchain and

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Blockchain and are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, IShares Blockchain exhibited solid returns over the last few months and may actually be approaching a breakup point.

Bausch Health Companies

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bausch Health Companies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Bausch may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with IShares Blockchain and Bausch

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

The idea behind iShares Blockchain and 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.