Correlation Between Bausch Lomb and Definitive Healthcare
Can any of the company-specific risk be diversified away by investing in both Bausch Lomb and Definitive Healthcare 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 Definitive Healthcare 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 Definitive Healthcare Corp, you can compare the effects of market volatilities on Bausch Lomb and Definitive Healthcare 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 Definitive Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Lomb and Definitive Healthcare.
Diversification Opportunities for Bausch Lomb and Definitive Healthcare
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bausch and Definitive is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Lomb Corp and Definitive Healthcare Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Definitive Healthcare 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 Definitive Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Definitive Healthcare has no effect on the direction of Bausch Lomb i.e., Bausch Lomb and Definitive Healthcare go up and down completely randomly.
Pair Corralation between Bausch Lomb and Definitive Healthcare
Given the investment horizon of 90 days Bausch Lomb Corp is expected to under-perform the Definitive Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Bausch Lomb Corp is 1.43 times less risky than Definitive Healthcare. The stock trades about -0.1 of its potential returns per unit of risk. The Definitive Healthcare Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 422.00 in Definitive Healthcare Corp on August 27, 2024 and sell it today you would earn a total of 15.00 from holding Definitive Healthcare Corp or generate 3.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bausch Lomb Corp vs. Definitive Healthcare Corp
Performance |
| Timeline |
| Bausch Lomb Corp |
| Definitive Healthcare |
Bausch Lomb and Definitive Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Lomb and Definitive Healthcare
The main advantage of trading using opposite Bausch Lomb and Definitive Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Lomb position performs unexpectedly, Definitive Healthcare 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 Definitive Healthcare will offset losses from the drop in Definitive Healthcare's long position.| Bausch Lomb vs. The Cooper Companies, | Bausch Lomb vs. ICU Medical | Bausch Lomb vs. Hologic | Bausch Lomb vs. Becton Dickinson and |
| Definitive Healthcare vs. HealthStream | Definitive Healthcare vs. National Research Corp | Definitive Healthcare vs. Forian Inc | Definitive Healthcare vs. HealthEquity |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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