Correlation Between Bausch Health and Sanofi ADR
Can any of the company-specific risk be diversified away by investing in both Bausch Health and Sanofi ADR 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 Sanofi ADR 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 Sanofi ADR, you can compare the effects of market volatilities on Bausch Health and Sanofi ADR 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 Sanofi ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and Sanofi ADR.
Diversification Opportunities for Bausch Health and Sanofi ADR
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bausch and Sanofi is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and Sanofi ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanofi ADR 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 Sanofi ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanofi ADR has no effect on the direction of Bausch Health i.e., Bausch Health and Sanofi ADR go up and down completely randomly.
Pair Corralation between Bausch Health and Sanofi ADR
Considering the 90-day investment horizon Bausch Health Companies is expected to under-perform the Sanofi ADR. In addition to that, Bausch Health is 2.94 times more volatile than Sanofi ADR. It trades about -0.18 of its total potential returns per unit of risk. Sanofi ADR is currently generating about -0.23 per unit of volatility. If you would invest 4,951 in Sanofi ADR on September 14, 2024 and sell it today you would lose (252.00) from holding Sanofi ADR or give up 5.09% 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. Sanofi ADR
Performance |
| Timeline |
| Bausch Health Companies |
| Sanofi ADR |
Bausch Health and Sanofi ADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and Sanofi ADR
The main advantage of trading using opposite Bausch Health and Sanofi ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, Sanofi ADR 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 Sanofi ADR will offset losses from the drop in Sanofi ADR's long position.| Bausch Health vs. Viatris | Bausch Health vs. Catalent | Bausch Health vs. Tilray Inc | Bausch Health vs. Zoetis Inc |
| Sanofi ADR vs. AstraZeneca PLC ADR | Sanofi ADR vs. Roche Holding Ltd | Sanofi ADR vs. GlaxoSmithKline PLC ADR | Sanofi ADR vs. Merck Company |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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