Correlation Between Bausch Lomb and Algoma Steel
Can any of the company-specific risk be diversified away by investing in both Bausch Lomb and Algoma Steel 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 Algoma Steel 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 Algoma Steel Group, you can compare the effects of market volatilities on Bausch Lomb and Algoma Steel 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 Algoma Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Lomb and Algoma Steel.
Diversification Opportunities for Bausch Lomb and Algoma Steel
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bausch and Algoma is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Lomb Corp and Algoma Steel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algoma Steel 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 Algoma Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algoma Steel Group has no effect on the direction of Bausch Lomb i.e., Bausch Lomb and Algoma Steel go up and down completely randomly.
Pair Corralation between Bausch Lomb and Algoma Steel
Given the investment horizon of 90 days Bausch Lomb is expected to generate 2.22 times less return on investment than Algoma Steel. But when comparing it to its historical volatility, Bausch Lomb Corp is 1.1 times less risky than Algoma Steel. It trades about 0.03 of its potential returns per unit of risk. Algoma Steel Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 604.00 in Algoma Steel Group on August 31, 2024 and sell it today you would earn a total of 463.00 from holding Algoma Steel Group or generate 76.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Bausch Lomb Corp vs. Algoma Steel Group
Performance |
| Timeline |
| Bausch Lomb Corp |
| Algoma Steel Group |
Bausch Lomb and Algoma Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Lomb and Algoma Steel
The main advantage of trading using opposite Bausch Lomb and Algoma Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Lomb position performs unexpectedly, Algoma Steel 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 Algoma Steel will offset losses from the drop in Algoma Steel's long position.| Bausch Lomb vs. The Cooper Companies, | Bausch Lomb vs. ICU Medical | Bausch Lomb vs. Hologic | Bausch Lomb vs. Becton Dickinson and |
| Algoma Steel vs. Nucor Corp | Algoma Steel vs. Steel Dynamics | Algoma Steel vs. ArcelorMittal SA ADR | Algoma Steel vs. Gerdau SA ADR |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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