Correlation Between Bausch Lomb and Nike
Can any of the company-specific risk be diversified away by investing in both Bausch Lomb and Nike 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 Nike 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 Nike Inc, you can compare the effects of market volatilities on Bausch Lomb and Nike 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 Nike. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Lomb and Nike.
Diversification Opportunities for Bausch Lomb and Nike
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bausch and Nike is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Lomb Corp and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike Inc 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 Nike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nike Inc has no effect on the direction of Bausch Lomb i.e., Bausch Lomb and Nike go up and down completely randomly.
Pair Corralation between Bausch Lomb and Nike
Given the investment horizon of 90 days Bausch Lomb Corp is expected to generate 1.16 times more return on investment than Nike. However, Bausch Lomb is 1.16 times more volatile than Nike Inc. It trades about 0.02 of its potential returns per unit of risk. Nike Inc is currently generating about -0.03 per unit of risk. If you would invest 1,849 in Bausch Lomb Corp on September 1, 2024 and sell it today you would earn a total of 133.00 from holding Bausch Lomb Corp or generate 7.19% 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. Nike Inc
Performance |
| Timeline |
| Bausch Lomb Corp |
| Nike Inc |
Bausch Lomb and Nike Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Lomb and Nike
The main advantage of trading using opposite Bausch Lomb and Nike positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Lomb position performs unexpectedly, Nike 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 Nike will offset losses from the drop in Nike'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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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