Correlation Between Bausch Lomb and Smith Douglas
Can any of the company-specific risk be diversified away by investing in both Bausch Lomb and Smith Douglas 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 Smith Douglas 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 Smith Douglas Homes, you can compare the effects of market volatilities on Bausch Lomb and Smith Douglas 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 Smith Douglas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Lomb and Smith Douglas.
Diversification Opportunities for Bausch Lomb and Smith Douglas
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bausch and Smith is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Lomb Corp and Smith Douglas Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smith Douglas Homes 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 Smith Douglas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smith Douglas Homes has no effect on the direction of Bausch Lomb i.e., Bausch Lomb and Smith Douglas go up and down completely randomly.
Pair Corralation between Bausch Lomb and Smith Douglas
Given the investment horizon of 90 days Bausch Lomb Corp is expected to under-perform the Smith Douglas. But the stock apears to be less risky and, when comparing its historical volatility, Bausch Lomb Corp is 2.11 times less risky than Smith Douglas. The stock trades about -0.09 of its potential returns per unit of risk. The Smith Douglas Homes is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 3,407 in Smith Douglas Homes on August 27, 2024 and sell it today you would lose (93.00) from holding Smith Douglas Homes or give up 2.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bausch Lomb Corp vs. Smith Douglas Homes
Performance |
| Timeline |
| Bausch Lomb Corp |
| Smith Douglas Homes |
Bausch Lomb and Smith Douglas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Lomb and Smith Douglas
The main advantage of trading using opposite Bausch Lomb and Smith Douglas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Lomb position performs unexpectedly, Smith Douglas 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 Smith Douglas will offset losses from the drop in Smith Douglas' long position.| Bausch Lomb vs. The Cooper Companies, | Bausch Lomb vs. ICU Medical | Bausch Lomb vs. Hologic | Bausch Lomb vs. Becton Dickinson and |
| Smith Douglas vs. TFI International | Smith Douglas vs. Hafnia Limited | Smith Douglas vs. LB Foster | Smith Douglas vs. Sun Country Airlines |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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