Correlation Between Miller Opportunity and Bausch

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

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

Diversification Opportunities for Miller Opportunity and Bausch

0.26

Correlation Coefficient

Miller Opportunity  Bausch

Modest diversification

The 3 months correlation between Miller and Bausch is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Miller Opportunity Trust 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 Miller Opportunity 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 Miller Opportunity Trust 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 Miller Opportunity i.e., Miller Opportunity and Bausch go up and down completely randomly.

Pair Corralation between Miller Opportunity and Bausch

Assuming the 90 days horizon Miller Opportunity Trust is expected to generate 0.72 times more return on investment than Bausch. However, Miller Opportunity Trust is 1.38 times less risky than Bausch. It trades about 0.14 of its potential returns per unit of risk. Bausch Health Companies is currently generating about 0.07 per unit of risk. If you would invest  3,672  in Miller Opportunity Trust on October 10, 2024 and sell it today you would earn a total of  369.00  from holding Miller Opportunity Trust or generate 10.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	77.42%
Values	Daily Returns

Miller Opportunity Trust  vs.  Bausch Health Companies

Miller Opportunity Trust

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Miller Opportunity Trust are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Miller Opportunity may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Bausch Health Companies

Risk-Adjusted Performance

5 of 100

Modest

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 conflicting basic indicators, Bausch may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Miller Opportunity and Bausch

The main advantage of trading using opposite Miller Opportunity and Bausch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Miller Opportunity 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 Miller Opportunity Trust 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.