Correlation Between Icon Energy and Bausch Lomb

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

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

Diversification Opportunities for Icon Energy and Bausch Lomb

-0.04

Correlation Coefficient

Icon Energy  Bausch Lomb

Good diversification

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

Pair Corralation between Icon Energy and Bausch Lomb

Given the investment horizon of 90 days Icon Energy Corp is expected to under-perform the Bausch Lomb. In addition to that, Icon Energy is 2.19 times more volatile than Bausch Lomb Corp. It trades about -0.05 of its total potential returns per unit of risk. Bausch Lomb Corp is currently generating about 0.02 per unit of volatility. If you would invest  1,698  in Bausch Lomb Corp on October 6, 2024 and sell it today you would earn a total of  76.00  from holding Bausch Lomb Corp or generate 4.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	25.68%
Values	Daily Returns

Icon Energy Corp  vs.  Bausch Lomb Corp

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.

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.

Pair Trading with Icon Energy and Bausch Lomb

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

The idea behind Icon Energy Corp and Bausch Lomb 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.