Correlation Between Bausch Health and Mustang Bio
Can any of the company-specific risk be diversified away by investing in both Bausch Health and Mustang Bio 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 Mustang Bio 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 Mustang Bio, you can compare the effects of market volatilities on Bausch Health and Mustang Bio 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 Mustang Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and Mustang Bio.
Diversification Opportunities for Bausch Health and Mustang Bio
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bausch and Mustang is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and Mustang Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mustang Bio 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 Mustang Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mustang Bio has no effect on the direction of Bausch Health i.e., Bausch Health and Mustang Bio go up and down completely randomly.
Pair Corralation between Bausch Health and Mustang Bio
Considering the 90-day investment horizon Bausch Health is expected to generate 6.1 times less return on investment than Mustang Bio. But when comparing it to its historical volatility, Bausch Health Companies is 10.3 times less risky than Mustang Bio. It trades about 0.04 of its potential returns per unit of risk. Mustang Bio is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 155.00 in Mustang Bio on September 2, 2024 and sell it today you would lose (135.00) from holding Mustang Bio or give up 87.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bausch Health Companies vs. Mustang Bio
Performance |
| Timeline |
| Bausch Health Companies |
| Mustang Bio |
Bausch Health and Mustang Bio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and Mustang Bio
The main advantage of trading using opposite Bausch Health and Mustang Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, Mustang Bio 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 Mustang Bio will offset losses from the drop in Mustang Bio's long position.| Bausch Health vs. Crinetics Pharmaceuticals | Bausch Health vs. Enanta Pharmaceuticals | Bausch Health vs. Amicus Therapeutics | Bausch Health vs. Connect Biopharma Holdings |
| Mustang Bio vs. Tff Pharmaceuticals | Mustang Bio vs. Eliem Therapeutics | Mustang Bio vs. Inhibrx | Mustang Bio vs. Enliven Therapeutics |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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