Correlation Between Bausch Health and Choice Properties
Can any of the company-specific risk be diversified away by investing in both Bausch Health and Choice Properties 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 Choice Properties 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 Choice Properties Real, you can compare the effects of market volatilities on Bausch Health and Choice Properties 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 Choice Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and Choice Properties.
Diversification Opportunities for Bausch Health and Choice Properties
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bausch and Choice is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and Choice Properties Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Choice Properties Real 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 Choice Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Choice Properties Real has no effect on the direction of Bausch Health i.e., Bausch Health and Choice Properties go up and down completely randomly.
Pair Corralation between Bausch Health and Choice Properties
Assuming the 90 days trading horizon Bausch Health Companies is expected to generate 3.55 times more return on investment than Choice Properties. However, Bausch Health is 3.55 times more volatile than Choice Properties Real. It trades about -0.01 of its potential returns per unit of risk. Choice Properties Real is currently generating about -0.16 per unit of risk. If you would invest 1,139 in Bausch Health Companies on August 29, 2024 and sell it today you would lose (29.00) from holding Bausch Health Companies or give up 2.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bausch Health Companies vs. Choice Properties Real
Performance |
| Timeline |
| Bausch Health Companies |
| Choice Properties Real |
Bausch Health and Choice Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and Choice Properties
The main advantage of trading using opposite Bausch Health and Choice Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, Choice Properties 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 Choice Properties will offset losses from the drop in Choice Properties' long position.| Bausch Health vs. Gildan Activewear | Bausch Health vs. Open Text Corp | Bausch Health vs. Waste Connections | Bausch Health vs. CCL Industries |
| Choice Properties vs. CT Real Estate | Choice Properties vs. Crombie Real Estate | Choice Properties vs. Allied Properties Real | Choice Properties vs. Dream Industrial Real |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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