Correlation Between Bausch Health and DGTL Holdings
Can any of the company-specific risk be diversified away by investing in both Bausch Health and DGTL Holdings 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 DGTL Holdings 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 DGTL Holdings, you can compare the effects of market volatilities on Bausch Health and DGTL Holdings 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 DGTL Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and DGTL Holdings.
Diversification Opportunities for Bausch Health and DGTL Holdings
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bausch and DGTL is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and DGTL Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DGTL Holdings 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 DGTL Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DGTL Holdings has no effect on the direction of Bausch Health i.e., Bausch Health and DGTL Holdings go up and down completely randomly.
Pair Corralation between Bausch Health and DGTL Holdings
Assuming the 90 days trading horizon Bausch Health is expected to generate 28.62 times less return on investment than DGTL Holdings. But when comparing it to its historical volatility, Bausch Health Companies is 25.95 times less risky than DGTL Holdings. It trades about 0.08 of its potential returns per unit of risk. DGTL Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 15.00 in DGTL Holdings on September 5, 2024 and sell it today you would lose (10.50) from holding DGTL Holdings or give up 70.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
Bausch Health Companies vs. DGTL Holdings
Performance |
| Timeline |
| Bausch Health Companies |
| DGTL Holdings |
Bausch Health and DGTL Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and DGTL Holdings
The main advantage of trading using opposite Bausch Health and DGTL Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, DGTL Holdings 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 DGTL Holdings will offset losses from the drop in DGTL Holdings' 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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