Correlation Between Bausch Health and Sun Life
Can any of the company-specific risk be diversified away by investing in both Bausch Health and Sun Life 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 Sun Life 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 Sun Life Financial, you can compare the effects of market volatilities on Bausch Health and Sun Life 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 Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and Sun Life.
Diversification Opportunities for Bausch Health and Sun Life
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bausch and Sun is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and Sun Life Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Life Financial 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 Sun Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Life Financial has no effect on the direction of Bausch Health i.e., Bausch Health and Sun Life go up and down completely randomly.
Pair Corralation between Bausch Health and Sun Life
Assuming the 90 days trading horizon Bausch Health Companies is expected to generate 5.68 times more return on investment than Sun Life. However, Bausch Health is 5.68 times more volatile than Sun Life Financial. It trades about 0.02 of its potential returns per unit of risk. Sun Life Financial is currently generating about -0.08 per unit of risk. If you would invest 1,136 in Bausch Health Companies on August 30, 2024 and sell it today you would earn a total of 3.00 from holding Bausch Health Companies or generate 0.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bausch Health Companies vs. Sun Life Financial
Performance |
| Timeline |
| Bausch Health Companies |
| Sun Life Financial |
Bausch Health and Sun Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and Sun Life
The main advantage of trading using opposite Bausch Health and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, Sun Life 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 Sun Life will offset losses from the drop in Sun Life's long position.| Bausch Health vs. Decibel Cannabis | Bausch Health vs. Cannara Biotech | Bausch Health vs. iShares Canadian HYBrid | Bausch Health vs. Altagas Cum Red |
| Sun Life vs. Mako Mining Corp | Sun Life vs. Ramp Metals | Sun Life vs. DRI Healthcare Trust | Sun Life 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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