Correlation Between Bausch Health and Microsoft Corp
Can any of the company-specific risk be diversified away by investing in both Bausch Health and Microsoft Corp 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 Microsoft Corp 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 Microsoft Corp CDR, you can compare the effects of market volatilities on Bausch Health and Microsoft Corp 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 Microsoft Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and Microsoft Corp.
Diversification Opportunities for Bausch Health and Microsoft Corp
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bausch and Microsoft is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and Microsoft Corp CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft Corp CDR 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 Microsoft Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft Corp CDR has no effect on the direction of Bausch Health i.e., Bausch Health and Microsoft Corp go up and down completely randomly.
Pair Corralation between Bausch Health and Microsoft Corp
Assuming the 90 days trading horizon Bausch Health Companies is expected to generate 2.13 times more return on investment than Microsoft Corp. However, Bausch Health is 2.13 times more volatile than Microsoft Corp CDR. It trades about 0.01 of its potential returns per unit of risk. Microsoft Corp CDR is currently generating about -0.07 per unit of risk. If you would invest 1,073 in Bausch Health Companies on October 24, 2024 and sell it today you would lose (2.00) from holding Bausch Health Companies or give up 0.19% 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. Microsoft Corp CDR
Performance |
| Timeline |
| Bausch Health Companies |
| Microsoft Corp CDR |
Bausch Health and Microsoft Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and Microsoft Corp
The main advantage of trading using opposite Bausch Health and Microsoft Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, Microsoft Corp 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 Microsoft Corp will offset losses from the drop in Microsoft Corp's long position.| Bausch Health vs. Gildan Activewear | Bausch Health vs. Open Text Corp | Bausch Health vs. Waste Connections | Bausch Health vs. CCL Industries |
| Microsoft Corp vs. Calian Technologies | Microsoft Corp vs. Exco Technologies Limited | Microsoft Corp vs. Bausch Health Companies | Microsoft Corp vs. CVS HEALTH CDR |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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