Correlation Between Bausch Health and Royal Bank
Can any of the company-specific risk be diversified away by investing in both Bausch Health and Royal Bank 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 Royal Bank 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 Royal Bank of, you can compare the effects of market volatilities on Bausch Health and Royal Bank 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 Royal Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and Royal Bank.
Diversification Opportunities for Bausch Health and Royal Bank
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bausch and Royal is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and Royal Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Bank 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 Royal Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Bank has no effect on the direction of Bausch Health i.e., Bausch Health and Royal Bank go up and down completely randomly.
Pair Corralation between Bausch Health and Royal Bank
Assuming the 90 days trading horizon Bausch Health Companies is expected to generate 4.86 times more return on investment than Royal Bank. However, Bausch Health is 4.86 times more volatile than Royal Bank of. It trades about 0.03 of its potential returns per unit of risk. Royal Bank of is currently generating about 0.11 per unit of risk. If you would invest 1,007 in Bausch Health Companies on September 14, 2024 and sell it today you would earn a total of 94.00 from holding Bausch Health Companies or generate 9.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bausch Health Companies vs. Royal Bank of
Performance |
| Timeline |
| Bausch Health Companies |
| Royal Bank |
Bausch Health and Royal Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and Royal Bank
The main advantage of trading using opposite Bausch Health and Royal Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, Royal Bank 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 Royal Bank will offset losses from the drop in Royal Bank's long position.| Bausch Health vs. Gildan Activewear | Bausch Health vs. Open Text Corp | Bausch Health vs. Waste Connections | Bausch Health vs. CCL Industries |
| Royal Bank vs. Brookfield Infrastructure Partners | Royal Bank vs. Brookfield Infrastructure Partners | Royal Bank vs. iShares Canadian HYBrid | Royal Bank vs. Solar Alliance Energy |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |