Correlation Between Bausch Lomb and United Fire
Can any of the company-specific risk be diversified away by investing in both Bausch Lomb and United Fire 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 United Fire 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 United Fire Group, you can compare the effects of market volatilities on Bausch Lomb and United Fire 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 United Fire. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Lomb and United Fire.
Diversification Opportunities for Bausch Lomb and United Fire
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bausch and United is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Lomb Corp and United Fire Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Fire Group 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 United Fire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Fire Group has no effect on the direction of Bausch Lomb i.e., Bausch Lomb and United Fire go up and down completely randomly.
Pair Corralation between Bausch Lomb and United Fire
Given the investment horizon of 90 days Bausch Lomb Corp is expected to generate 0.91 times more return on investment than United Fire. However, Bausch Lomb Corp is 1.1 times less risky than United Fire. It trades about 0.04 of its potential returns per unit of risk. United Fire Group is currently generating about 0.02 per unit of risk. If you would invest 1,455 in Bausch Lomb Corp on September 12, 2024 and sell it today you would earn a total of 610.00 from holding Bausch Lomb Corp or generate 41.92% 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. United Fire Group
Performance |
| Timeline |
| Bausch Lomb Corp |
| United Fire Group |
Bausch Lomb and United Fire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Lomb and United Fire
The main advantage of trading using opposite Bausch Lomb and United Fire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Lomb position performs unexpectedly, United Fire 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 United Fire will offset losses from the drop in United Fire's long position.| Bausch Lomb vs. The Cooper Companies, | Bausch Lomb vs. ICU Medical | Bausch Lomb vs. Hologic | Bausch Lomb vs. Becton Dickinson and |
| United Fire vs. Donegal Group B | United Fire vs. Horace Mann Educators | United Fire vs. Donegal Group A | United Fire vs. Global Indemnity PLC |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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