Correlation Between Banc Of and Bausch Lomb
Can any of the company-specific risk be diversified away by investing in both Banc Of 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 Banc Of and Bausch Lomb into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banc of California and Bausch Lomb Corp, you can compare the effects of market volatilities on Banc Of 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 Banc Of with a short position of Bausch Lomb. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banc Of and Bausch Lomb.
Diversification Opportunities for Banc Of and Bausch Lomb
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Banc and Bausch is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Banc of California 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 Banc Of 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 Banc of California 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 Banc Of i.e., Banc Of and Bausch Lomb go up and down completely randomly.
Pair Corralation between Banc Of and Bausch Lomb
Assuming the 90 days trading horizon Banc of California is expected to generate 1.97 times more return on investment than Bausch Lomb. However, Banc Of is 1.97 times more volatile than Bausch Lomb Corp. It trades about 0.04 of its potential returns per unit of risk. Bausch Lomb Corp is currently generating about 0.03 per unit of risk. If you would invest 1,458 in Banc of California on September 3, 2024 and sell it today you would earn a total of 1,042 from holding Banc of California or generate 71.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banc of California vs. Bausch Lomb Corp
Performance |
| Timeline |
| Banc of California |
| Bausch Lomb Corp |
Banc Of and Bausch Lomb Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banc Of and Bausch Lomb
The main advantage of trading using opposite Banc Of and Bausch Lomb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banc Of 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.| Banc Of vs. Bausch Lomb Corp | Banc Of vs. Franklin Wireless Corp | Banc Of vs. Sensient Technologies | Banc Of vs. Repligen |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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