Correlation Between Bausch Health and Mersana Therapeutics
Can any of the company-specific risk be diversified away by investing in both Bausch Health and Mersana Therapeutics 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 Mersana Therapeutics 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 Mersana Therapeutics, you can compare the effects of market volatilities on Bausch Health and Mersana Therapeutics 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 Mersana Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and Mersana Therapeutics.
Diversification Opportunities for Bausch Health and Mersana Therapeutics
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bausch and Mersana is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and Mersana Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mersana Therapeutics 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 Mersana Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mersana Therapeutics has no effect on the direction of Bausch Health i.e., Bausch Health and Mersana Therapeutics go up and down completely randomly.
Pair Corralation between Bausch Health and Mersana Therapeutics
Considering the 90-day investment horizon Bausch Health Companies is expected to generate 0.56 times more return on investment than Mersana Therapeutics. However, Bausch Health Companies is 1.79 times less risky than Mersana Therapeutics. It trades about 0.03 of its potential returns per unit of risk. Mersana Therapeutics is currently generating about -0.08 per unit of risk. If you would invest 760.00 in Bausch Health Companies on November 29, 2024 and sell it today you would earn a total of 10.00 from holding Bausch Health Companies or generate 1.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bausch Health Companies vs. Mersana Therapeutics
Performance |
| Timeline |
| Bausch Health Companies |
| Mersana Therapeutics |
Bausch Health and Mersana Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and Mersana Therapeutics
The main advantage of trading using opposite Bausch Health and Mersana Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, Mersana Therapeutics 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 Mersana Therapeutics will offset losses from the drop in Mersana Therapeutics' long position.| Bausch Health vs. Viatris | Bausch Health vs. Tilray Inc | Bausch Health vs. Zoetis Inc | Bausch Health vs. Emergent Biosolutions |
| Mersana Therapeutics vs. Terns Pharmaceuticals | Mersana Therapeutics vs. Amylyx Pharmaceuticals | Mersana Therapeutics vs. Acumen Pharmaceuticals | Mersana Therapeutics vs. Inozyme Pharma |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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