Correlation Between Bausch Lomb and ICU Medical
Can any of the company-specific risk be diversified away by investing in both Bausch Lomb and ICU Medical 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 ICU Medical 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 ICU Medical, you can compare the effects of market volatilities on Bausch Lomb and ICU Medical 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 ICU Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Lomb and ICU Medical.
Diversification Opportunities for Bausch Lomb and ICU Medical
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bausch and ICU is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Lomb Corp and ICU Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICU Medical 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 ICU Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICU Medical has no effect on the direction of Bausch Lomb i.e., Bausch Lomb and ICU Medical go up and down completely randomly.
Pair Corralation between Bausch Lomb and ICU Medical
Given the investment horizon of 90 days Bausch Lomb Corp is expected to generate 0.9 times more return on investment than ICU Medical. However, Bausch Lomb Corp is 1.11 times less risky than ICU Medical. It trades about -0.1 of its potential returns per unit of risk. ICU Medical is currently generating about -0.22 per unit of risk. If you would invest 2,076 in Bausch Lomb Corp on August 30, 2024 and sell it today you would lose (79.00) from holding Bausch Lomb Corp or give up 3.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bausch Lomb Corp vs. ICU Medical
Performance |
| Timeline |
| Bausch Lomb Corp |
| ICU Medical |
Bausch Lomb and ICU Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Lomb and ICU Medical
The main advantage of trading using opposite Bausch Lomb and ICU Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Lomb position performs unexpectedly, ICU Medical 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 ICU Medical will offset losses from the drop in ICU Medical's long position.| Bausch Lomb vs. Femasys | Bausch Lomb vs. Sharps Technology Warrant | Bausch Lomb vs. GlucoTrack | Bausch Lomb vs. Walt Disney |
| ICU Medical vs. Femasys | ICU Medical vs. Sharps Technology Warrant | ICU Medical vs. GlucoTrack | ICU Medical vs. Walt Disney |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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