Correlation Between Bausch Lomb and Western Sierra
Can any of the company-specific risk be diversified away by investing in both Bausch Lomb and Western Sierra 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 Western Sierra 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 Western Sierra Mining, you can compare the effects of market volatilities on Bausch Lomb and Western Sierra 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 Western Sierra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Lomb and Western Sierra.
Diversification Opportunities for Bausch Lomb and Western Sierra
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bausch and Western is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Lomb Corp and Western Sierra Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Sierra Mining 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 Western Sierra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Sierra Mining has no effect on the direction of Bausch Lomb i.e., Bausch Lomb and Western Sierra go up and down completely randomly.
Pair Corralation between Bausch Lomb and Western Sierra
Given the investment horizon of 90 days Bausch Lomb is expected to generate 158.24 times less return on investment than Western Sierra. But when comparing it to its historical volatility, Bausch Lomb Corp is 58.69 times less risky than Western Sierra. It trades about 0.05 of its potential returns per unit of risk. Western Sierra Mining is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1.60 in Western Sierra Mining on September 4, 2024 and sell it today you would lose (0.92) from holding Western Sierra Mining or give up 57.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bausch Lomb Corp vs. Western Sierra Mining
Performance |
| Timeline |
| Bausch Lomb Corp |
| Western Sierra Mining |
Bausch Lomb and Western Sierra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Lomb and Western Sierra
The main advantage of trading using opposite Bausch Lomb and Western Sierra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Lomb position performs unexpectedly, Western Sierra 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 Western Sierra will offset losses from the drop in Western Sierra's long position.| Bausch Lomb vs. The Cooper Companies, | Bausch Lomb vs. ICU Medical | Bausch Lomb vs. Hologic | Bausch Lomb vs. Becton Dickinson and |
| Western Sierra vs. Green Cures Botanical | Western Sierra vs. Cann American Corp | Western Sierra vs. Rimrock Gold Corp | Western Sierra vs. Galexxy Holdings |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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