Correlation Between Bausch Health and Medmen Enterprises
Can any of the company-specific risk be diversified away by investing in both Bausch Health and Medmen Enterprises 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 Medmen Enterprises 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 Medmen Enterprises Class, you can compare the effects of market volatilities on Bausch Health and Medmen Enterprises 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 Medmen Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and Medmen Enterprises.
Diversification Opportunities for Bausch Health and Medmen Enterprises
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bausch and Medmen is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and Medmen Enterprises Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medmen Enterprises Class 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 Medmen Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medmen Enterprises Class has no effect on the direction of Bausch Health i.e., Bausch Health and Medmen Enterprises go up and down completely randomly.
Pair Corralation between Bausch Health and Medmen Enterprises
Considering the 90-day investment horizon Bausch Health is expected to generate 25.8 times less return on investment than Medmen Enterprises. But when comparing it to its historical volatility, Bausch Health Companies is 14.59 times less risky than Medmen Enterprises. It trades about 0.02 of its potential returns per unit of risk. Medmen Enterprises Class is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3.10 in Medmen Enterprises Class on August 29, 2024 and sell it today you would lose (3.09) from holding Medmen Enterprises Class or give up 99.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 81.62% |
| Values | Daily Returns |
Bausch Health Companies vs. Medmen Enterprises Class
Performance |
| Timeline |
| Bausch Health Companies |
| Medmen Enterprises Class |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Bausch Health and Medmen Enterprises Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and Medmen Enterprises
The main advantage of trading using opposite Bausch Health and Medmen Enterprises positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, Medmen Enterprises 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 Medmen Enterprises will offset losses from the drop in Medmen Enterprises' long position.| Bausch Health vs. Viatris | Bausch Health vs. Catalent | Bausch Health vs. Tilray Inc | Bausch Health vs. Zoetis Inc |
| Medmen Enterprises vs. Curaleaf Holdings | Medmen Enterprises vs. Green Thumb Industries | Medmen Enterprises vs. Trulieve Cannabis Corp | Medmen Enterprises vs. Verano Holdings Corp |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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