Correlation Between Bausch Health and Themac Resources
Can any of the company-specific risk be diversified away by investing in both Bausch Health and Themac 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 Themac 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 Themac Resources Group, you can compare the effects of market volatilities on Bausch Health and Themac 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 Themac Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and Themac Resources.
Diversification Opportunities for Bausch Health and Themac Resources
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bausch and Themac is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and Themac Resources Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Themac 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 Themac Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Themac Resources has no effect on the direction of Bausch Health i.e., Bausch Health and Themac Resources go up and down completely randomly.
Pair Corralation between Bausch Health and Themac Resources
Assuming the 90 days trading horizon Bausch Health Companies is expected to generate 0.29 times more return on investment than Themac Resources. However, Bausch Health Companies is 3.46 times less risky than Themac Resources. It trades about -0.18 of its potential returns per unit of risk. Themac Resources Group is currently generating about -0.09 per unit of risk. If you would invest 1,289 in Bausch Health Companies on September 5, 2024 and sell it today you would lose (148.00) from holding Bausch Health Companies or give up 11.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Bausch Health Companies vs. Themac Resources Group
Performance |
| Timeline |
| Bausch Health Companies |
| Themac Resources |
Bausch Health and Themac Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and Themac Resources
The main advantage of trading using opposite Bausch Health and Themac Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, Themac 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 Themac Resources will offset losses from the drop in Themac Resources' long position.| Bausch Health vs. Gildan Activewear | Bausch Health vs. Open Text Corp | Bausch Health vs. Waste Connections | Bausch Health vs. CCL Industries |
| Themac Resources vs. CVS HEALTH CDR | Themac Resources vs. Ramp Metals | Themac Resources vs. Talon Metals Corp | Themac Resources vs. Bausch Health Companies |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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