Correlation Between Bausch Health and Homerun Resources
Can any of the company-specific risk be diversified away by investing in both Bausch Health and Homerun 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 Homerun 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 Homerun Resources, you can compare the effects of market volatilities on Bausch Health and Homerun 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 Homerun Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and Homerun Resources.
Diversification Opportunities for Bausch Health and Homerun Resources
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bausch and Homerun is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and Homerun Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Homerun 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 Homerun Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Homerun Resources has no effect on the direction of Bausch Health i.e., Bausch Health and Homerun Resources go up and down completely randomly.
Pair Corralation between Bausch Health and Homerun Resources
Assuming the 90 days trading horizon Bausch Health Companies is expected to generate 0.51 times more return on investment than Homerun Resources. However, Bausch Health Companies is 1.96 times less risky than Homerun Resources. It trades about -0.14 of its potential returns per unit of risk. Homerun Resources is currently generating about -0.21 per unit of risk. If you would invest 1,119 in Bausch Health Companies on November 7, 2024 and sell it today you would lose (79.00) from holding Bausch Health Companies or give up 7.06% 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. Homerun Resources
Performance |
| Timeline |
| Bausch Health Companies |
| Homerun Resources |
Bausch Health and Homerun Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and Homerun Resources
The main advantage of trading using opposite Bausch Health and Homerun Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, Homerun 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 Homerun Resources will offset losses from the drop in Homerun Resources' long position.| Bausch Health vs. Gildan Activewear | Bausch Health vs. Open Text Corp | Bausch Health vs. Waste Connections | Bausch Health vs. CCL Industries |
| Homerun Resources vs. DIRTT Environmental Solutions | Homerun Resources vs. Cogeco Communications | Homerun Resources vs. Algoma Steel Group | Homerun Resources vs. Maple Peak Investments |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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