Correlation Between Bausch Health and Durect
Can any of the company-specific risk be diversified away by investing in both Bausch Health and Durect 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 Durect 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 Durect, you can compare the effects of market volatilities on Bausch Health and Durect 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 Durect. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and Durect.
Diversification Opportunities for Bausch Health and Durect
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bausch and Durect is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and Durect in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Durect 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 Durect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Durect has no effect on the direction of Bausch Health i.e., Bausch Health and Durect go up and down completely randomly.
Pair Corralation between Bausch Health and Durect
Considering the 90-day investment horizon Bausch Health Companies is expected to generate 0.51 times more return on investment than Durect. However, Bausch Health Companies is 1.98 times less risky than Durect. It trades about 0.02 of its potential returns per unit of risk. Durect is currently generating about 0.01 per unit of risk. If you would invest 765.00 in Bausch Health Companies on September 2, 2024 and sell it today you would earn a total of 72.00 from holding Bausch Health Companies or generate 9.41% 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. Durect
Performance |
| Timeline |
| Bausch Health Companies |
| Durect |
Bausch Health and Durect Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and Durect
The main advantage of trading using opposite Bausch Health and Durect positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, Durect 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 Durect will offset losses from the drop in Durect's long position.| Bausch Health vs. Crinetics Pharmaceuticals | Bausch Health vs. Enanta Pharmaceuticals | Bausch Health vs. Amicus Therapeutics | Bausch Health vs. Connect Biopharma Holdings |
| Durect vs. Crinetics Pharmaceuticals | Durect vs. Enanta Pharmaceuticals | Durect vs. Amicus Therapeutics | Durect vs. Connect Biopharma Holdings |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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