Correlation Between Bausch Lomb and Merit Medical
Can any of the company-specific risk be diversified away by investing in both Bausch Lomb and Merit 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 Merit 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 Merit Medical Systems, you can compare the effects of market volatilities on Bausch Lomb and Merit 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 Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Lomb and Merit Medical.
Diversification Opportunities for Bausch Lomb and Merit Medical
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bausch and Merit is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Lomb Corp and Merit Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merit Medical Systems 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 Merit Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merit Medical Systems has no effect on the direction of Bausch Lomb i.e., Bausch Lomb and Merit Medical go up and down completely randomly.
Pair Corralation between Bausch Lomb and Merit Medical
Given the investment horizon of 90 days Bausch Lomb Corp is expected to under-perform the Merit Medical. In addition to that, Bausch Lomb is 1.17 times more volatile than Merit Medical Systems. It trades about -0.08 of its total potential returns per unit of risk. Merit Medical Systems is currently generating about 0.28 per unit of volatility. If you would invest 9,531 in Merit Medical Systems on August 29, 2024 and sell it today you would earn a total of 869.00 from holding Merit Medical Systems or generate 9.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bausch Lomb Corp vs. Merit Medical Systems
Performance |
| Timeline |
| Bausch Lomb Corp |
| Merit Medical Systems |
Bausch Lomb and Merit Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Lomb and Merit Medical
The main advantage of trading using opposite Bausch Lomb and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Lomb position performs unexpectedly, Merit 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 Merit Medical will offset losses from the drop in Merit Medical's long position.| Bausch Lomb vs. The Cooper Companies, | Bausch Lomb vs. ICU Medical | Bausch Lomb vs. Hologic | Bausch Lomb vs. Becton Dickinson and |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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