Correlation Between Bausch Lomb and Air Lease
Can any of the company-specific risk be diversified away by investing in both Bausch Lomb and Air Lease 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 Lomb and Air Lease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bausch Lomb Corp and Air Lease, you can compare the effects of market volatilities on Bausch Lomb and Air Lease 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 Lomb with a short position of Air Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Lomb and Air Lease.
Diversification Opportunities for Bausch Lomb and Air Lease
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bausch and Air is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Lomb Corp and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease and Bausch Lomb 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 Lomb Corp are associated (or correlated) with Air Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Lease has no effect on the direction of Bausch Lomb i.e., Bausch Lomb and Air Lease go up and down completely randomly.
Pair Corralation between Bausch Lomb and Air Lease
Given the investment horizon of 90 days Bausch Lomb is expected to generate 1.73 times less return on investment than Air Lease. In addition to that, Bausch Lomb is 1.27 times more volatile than Air Lease. It trades about 0.02 of its total potential returns per unit of risk. Air Lease is currently generating about 0.04 per unit of volatility. If you would invest 4,060 in Air Lease on September 1, 2024 and sell it today you would earn a total of 1,030 from holding Air Lease or generate 25.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bausch Lomb Corp vs. Air Lease
Performance |
| Timeline |
| Bausch Lomb Corp |
| Air Lease |
Bausch Lomb and Air Lease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Lomb and Air Lease
The main advantage of trading using opposite Bausch Lomb and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Lomb position performs unexpectedly, Air Lease 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 Air Lease will offset losses from the drop in Air Lease's long position.| Bausch Lomb vs. The Cooper Companies, | Bausch Lomb vs. ICU Medical | Bausch Lomb vs. Hologic | Bausch Lomb vs. Becton Dickinson and |
| Air Lease vs. Alta Equipment Group | Air Lease vs. McGrath RentCorp | Air Lease vs. Herc Holdings | Air Lease vs. GATX Corporation |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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