Correlation Between Bausch Health and Sernova Corp
Can any of the company-specific risk be diversified away by investing in both Bausch Health and Sernova 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 Sernova 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 Sernova Corp, you can compare the effects of market volatilities on Bausch Health and Sernova 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 Sernova Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and Sernova Corp.
Diversification Opportunities for Bausch Health and Sernova Corp
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bausch and Sernova is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and Sernova Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sernova Corp 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 Sernova Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sernova Corp has no effect on the direction of Bausch Health i.e., Bausch Health and Sernova Corp go up and down completely randomly.
Pair Corralation between Bausch Health and Sernova Corp
Assuming the 90 days trading horizon Bausch Health Companies is expected to generate 0.61 times more return on investment than Sernova Corp. However, Bausch Health Companies is 1.65 times less risky than Sernova Corp. It trades about 0.04 of its potential returns per unit of risk. Sernova Corp is currently generating about -0.07 per unit of risk. If you would invest 973.00 in Bausch Health Companies on September 2, 2024 and sell it today you would earn a total of 222.00 from holding Bausch Health Companies or generate 22.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bausch Health Companies vs. Sernova Corp
Performance |
| Timeline |
| Bausch Health Companies |
| Sernova Corp |
Bausch Health and Sernova Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and Sernova Corp
The main advantage of trading using opposite Bausch Health and Sernova Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, Sernova 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 Sernova Corp will offset losses from the drop in Sernova 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 |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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