Correlation Between Bausch Health and DRI Healthcare
Can any of the company-specific risk be diversified away by investing in both Bausch Health and DRI Healthcare 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 DRI Healthcare 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 DRI Healthcare Trust, you can compare the effects of market volatilities on Bausch Health and DRI Healthcare 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 DRI Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and DRI Healthcare.
Diversification Opportunities for Bausch Health and DRI Healthcare
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bausch and DRI is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and DRI Healthcare Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DRI Healthcare Trust 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 DRI Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DRI Healthcare Trust has no effect on the direction of Bausch Health i.e., Bausch Health and DRI Healthcare go up and down completely randomly.
Pair Corralation between Bausch Health and DRI Healthcare
Assuming the 90 days trading horizon Bausch Health Companies is expected to under-perform the DRI Healthcare. In addition to that, Bausch Health is 1.21 times more volatile than DRI Healthcare Trust. It trades about -0.26 of its total potential returns per unit of risk. DRI Healthcare Trust is currently generating about -0.21 per unit of volatility. If you would invest 1,000.00 in DRI Healthcare Trust on September 2, 2024 and sell it today you would lose (85.00) from holding DRI Healthcare Trust or give up 8.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bausch Health Companies vs. DRI Healthcare Trust
Performance |
| Timeline |
| Bausch Health Companies |
| DRI Healthcare Trust |
Bausch Health and DRI Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and DRI Healthcare
The main advantage of trading using opposite Bausch Health and DRI Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, DRI Healthcare 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 DRI Healthcare will offset losses from the drop in DRI Healthcare's long position.| Bausch Health vs. Gildan Activewear | Bausch Health vs. Open Text Corp | Bausch Health vs. Waste Connections | Bausch Health vs. CCL Industries |
| DRI Healthcare vs. DRI Healthcare Trust | DRI Healthcare vs. Dexterra Group | DRI Healthcare vs. European Residential Real | DRI Healthcare vs. Dream Residential 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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