Correlation Between Bausch Health and Terns Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Bausch Health and Terns Pharmaceuticals 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 Terns Pharmaceuticals 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 Terns Pharmaceuticals, you can compare the effects of market volatilities on Bausch Health and Terns Pharmaceuticals 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 Terns Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and Terns Pharmaceuticals.
Diversification Opportunities for Bausch Health and Terns Pharmaceuticals
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bausch and Terns is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and Terns Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terns Pharmaceuticals 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 Terns Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terns Pharmaceuticals has no effect on the direction of Bausch Health i.e., Bausch Health and Terns Pharmaceuticals go up and down completely randomly.
Pair Corralation between Bausch Health and Terns Pharmaceuticals
Considering the 90-day investment horizon Bausch Health Companies is expected to generate 0.69 times more return on investment than Terns Pharmaceuticals. However, Bausch Health Companies is 1.44 times less risky than Terns Pharmaceuticals. It trades about 0.06 of its potential returns per unit of risk. Terns Pharmaceuticals is currently generating about 0.0 per unit of risk. If you would invest 643.00 in Bausch Health Companies on September 14, 2024 and sell it today you would earn a total of 132.00 from holding Bausch Health Companies or generate 20.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bausch Health Companies vs. Terns Pharmaceuticals
Performance |
| Timeline |
| Bausch Health Companies |
| Terns Pharmaceuticals |
Bausch Health and Terns Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and Terns Pharmaceuticals
The main advantage of trading using opposite Bausch Health and Terns Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, Terns Pharmaceuticals 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 Terns Pharmaceuticals will offset losses from the drop in Terns Pharmaceuticals' long position.| Bausch Health vs. Viatris | Bausch Health vs. Catalent | Bausch Health vs. Tilray Inc | Bausch Health vs. Zoetis Inc |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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