Correlation Between Bausch Lomb and Alumina
Can any of the company-specific risk be diversified away by investing in both Bausch Lomb and Alumina 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 Alumina 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 Alumina Limited, you can compare the effects of market volatilities on Bausch Lomb and Alumina 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 Alumina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Lomb and Alumina.
Diversification Opportunities for Bausch Lomb and Alumina
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bausch and Alumina is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Lomb Corp and Alumina Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alumina Limited 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 Alumina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alumina Limited has no effect on the direction of Bausch Lomb i.e., Bausch Lomb and Alumina go up and down completely randomly.
Pair Corralation between Bausch Lomb and Alumina
Given the investment horizon of 90 days Bausch Lomb Corp is expected to generate 1.34 times more return on investment than Alumina. However, Bausch Lomb is 1.34 times more volatile than Alumina Limited. It trades about 0.09 of its potential returns per unit of risk. Alumina Limited is currently generating about -0.02 per unit of risk. If you would invest 1,548 in Bausch Lomb Corp on September 3, 2024 and sell it today you would earn a total of 399.00 from holding Bausch Lomb Corp or generate 25.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 35.2% |
| Values | Daily Returns |
Bausch Lomb Corp vs. Alumina Limited
Performance |
| Timeline |
| Bausch Lomb Corp |
| Alumina Limited |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Bausch Lomb and Alumina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Lomb and Alumina
The main advantage of trading using opposite Bausch Lomb and Alumina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Lomb position performs unexpectedly, Alumina 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 Alumina will offset losses from the drop in Alumina's long position.| Bausch Lomb vs. The Cooper Companies, | Bausch Lomb vs. ICU Medical | Bausch Lomb vs. Hologic | Bausch Lomb vs. Becton Dickinson and |
| Alumina vs. Coupang LLC | Alumina vs. Boston Beer | Alumina vs. Asbury Automotive Group | Alumina vs. Getty Realty |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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