Correlation Between Bausch Health and Brookfield Office
Can any of the company-specific risk be diversified away by investing in both Bausch Health and Brookfield Office 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 Brookfield Office 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 Brookfield Office Properties, you can compare the effects of market volatilities on Bausch Health and Brookfield Office 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 Brookfield Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and Brookfield Office.
Diversification Opportunities for Bausch Health and Brookfield Office
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bausch and Brookfield is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and Brookfield Office Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Office 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 Brookfield Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Office has no effect on the direction of Bausch Health i.e., Bausch Health and Brookfield Office go up and down completely randomly.
Pair Corralation between Bausch Health and Brookfield Office
Assuming the 90 days trading horizon Bausch Health Companies is expected to under-perform the Brookfield Office. In addition to that, Bausch Health is 1.87 times more volatile than Brookfield Office Properties. It trades about -0.07 of its total potential returns per unit of risk. Brookfield Office Properties is currently generating about 0.26 per unit of volatility. If you would invest 970.00 in Brookfield Office Properties on November 6, 2024 and sell it today you would earn a total of 60.00 from holding Brookfield Office Properties or generate 6.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bausch Health Companies vs. Brookfield Office Properties
Performance |
| Timeline |
| Bausch Health Companies |
| Brookfield Office |
Bausch Health and Brookfield Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and Brookfield Office
The main advantage of trading using opposite Bausch Health and Brookfield Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, Brookfield Office 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 Brookfield Office will offset losses from the drop in Brookfield Office's long position.| Bausch Health vs. Gildan Activewear | Bausch Health vs. Open Text Corp | Bausch Health vs. Waste Connections | Bausch Health vs. CCL Industries |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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