Correlation Between Bausch Health and Ascot Resources
Can any of the company-specific risk be diversified away by investing in both Bausch Health and Ascot Resources 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 Bausch Health and Ascot Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bausch Health Companies and Ascot Resources, you can compare the effects of market volatilities on Bausch Health and Ascot Resources 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 Bausch Health with a short position of Ascot Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and Ascot Resources.
Diversification Opportunities for Bausch Health and Ascot Resources
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bausch and Ascot is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and Ascot Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ascot Resources and Bausch Health 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 Bausch Health Companies are associated (or correlated) with Ascot Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ascot Resources has no effect on the direction of Bausch Health i.e., Bausch Health and Ascot Resources go up and down completely randomly.
Pair Corralation between Bausch Health and Ascot Resources
Assuming the 90 days trading horizon Bausch Health Companies is expected to under-perform the Ascot Resources. But the stock apears to be less risky and, when comparing its historical volatility, Bausch Health Companies is 1.79 times less risky than Ascot Resources. The stock trades about 0.0 of its potential returns per unit of risk. The Ascot Resources is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 18.00 in Ascot Resources on October 17, 2024 and sell it today you would earn a total of 2.00 from holding Ascot Resources or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bausch Health Companies vs. Ascot Resources
Performance |
| Timeline |
| Bausch Health Companies |
| Ascot Resources |
Bausch Health and Ascot Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and Ascot Resources
The main advantage of trading using opposite Bausch Health and Ascot Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, Ascot Resources 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 Ascot Resources will offset losses from the drop in Ascot Resources' long position.| Bausch Health vs. Gildan Activewear | Bausch Health vs. Open Text Corp | Bausch Health vs. Waste Connections | Bausch Health vs. CCL Industries |
| Ascot Resources vs. Bausch Health Companies | Ascot Resources vs. T2 Metals Corp | Ascot Resources vs. TUT Fitness Group | Ascot Resources vs. Rogers Communications |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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