Correlation Between Bausch Lomb and Alaska Air
Can any of the company-specific risk be diversified away by investing in both Bausch Lomb and Alaska Air 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 Alaska Air 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 Alaska Air Group, you can compare the effects of market volatilities on Bausch Lomb and Alaska Air 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 Alaska Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Lomb and Alaska Air.
Diversification Opportunities for Bausch Lomb and Alaska Air
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bausch and Alaska is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Lomb Corp and Alaska Air Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alaska Air Group 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 Alaska Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alaska Air Group has no effect on the direction of Bausch Lomb i.e., Bausch Lomb and Alaska Air go up and down completely randomly.
Pair Corralation between Bausch Lomb and Alaska Air
Given the investment horizon of 90 days Bausch Lomb Corp is expected to under-perform the Alaska Air. But the stock apears to be less risky and, when comparing its historical volatility, Bausch Lomb Corp is 1.31 times less risky than Alaska Air. The stock trades about -0.06 of its potential returns per unit of risk. The Alaska Air Group is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 4,727 in Alaska Air Group on August 31, 2024 and sell it today you would earn a total of 541.00 from holding Alaska Air Group or generate 11.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bausch Lomb Corp vs. Alaska Air Group
Performance |
| Timeline |
| Bausch Lomb Corp |
| Alaska Air Group |
Bausch Lomb and Alaska Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Lomb and Alaska Air
The main advantage of trading using opposite Bausch Lomb and Alaska Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Lomb position performs unexpectedly, Alaska Air 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 Alaska Air will offset losses from the drop in Alaska Air's long position.| Bausch Lomb vs. The Cooper Companies, | Bausch Lomb vs. ICU Medical | Bausch Lomb vs. Hologic | Bausch Lomb vs. Becton Dickinson and |
| Alaska Air vs. JetBlue Airways Corp | Alaska Air vs. Allegiant Travel | Alaska Air vs. SkyWest | Alaska Air vs. Air Transport Services |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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