Correlation Between Janus Detroit and Bausch

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

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

Diversification Opportunities for Janus Detroit and Bausch

0.82

Correlation Coefficient

Janus Detroit  Bausch

Very poor diversification

The 3 months correlation between Janus and Bausch is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Janus Detroit Street 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 Janus Detroit 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 Janus Detroit Street 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 Janus Detroit i.e., Janus Detroit and Bausch go up and down completely randomly.

Pair Corralation between Janus Detroit and Bausch

Given the investment horizon of 90 days Janus Detroit is expected to generate 107.72 times less return on investment than Bausch. But when comparing it to its historical volatility, Janus Detroit Street is 338.9 times less risky than Bausch. It trades about 0.22 of its potential returns per unit of risk. Bausch Health Companies is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  4,910  in Bausch Health Companies on September 23, 2024 and sell it today you would earn a total of  1,494  from holding Bausch Health Companies or generate 30.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	67.2%
Values	Daily Returns

Janus Detroit Street  vs.  Bausch Health Companies

Janus Detroit Street

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Janus Detroit Street are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Janus Detroit is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 Janus Detroit and Bausch

The main advantage of trading using opposite Janus Detroit and Bausch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Janus Detroit 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 Janus Detroit Street 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.