Correlation Between Bausch Health and HCA Healthcare
Can any of the company-specific risk be diversified away by investing in both Bausch Health and HCA Healthcare 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 Health and HCA Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bausch Health Companies and HCA Healthcare, you can compare the effects of market volatilities on Bausch Health and HCA Healthcare 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 Health with a short position of HCA Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and HCA Healthcare.
Diversification Opportunities for Bausch Health and HCA Healthcare
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bausch and HCA is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and HCA Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCA Healthcare and Bausch Health 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 Health Companies are associated (or correlated) with HCA Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCA Healthcare has no effect on the direction of Bausch Health i.e., Bausch Health and HCA Healthcare go up and down completely randomly.
Pair Corralation between Bausch Health and HCA Healthcare
Assuming the 90 days horizon Bausch Health Companies is expected to generate 2.06 times more return on investment than HCA Healthcare. However, Bausch Health is 2.06 times more volatile than HCA Healthcare. It trades about 0.04 of its potential returns per unit of risk. HCA Healthcare is currently generating about 0.08 per unit of risk. If you would invest 656.00 in Bausch Health Companies on September 2, 2024 and sell it today you would earn a total of 127.00 from holding Bausch Health Companies or generate 19.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bausch Health Companies vs. HCA Healthcare
Performance |
| Timeline |
| Bausch Health Companies |
| HCA Healthcare |
Bausch Health and HCA Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and HCA Healthcare
The main advantage of trading using opposite Bausch Health and HCA Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, HCA Healthcare 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 HCA Healthcare will offset losses from the drop in HCA Healthcare's long position.| Bausch Health vs. Vulcan Materials | Bausch Health vs. ARROW ELECTRONICS | Bausch Health vs. Arrow Electronics | Bausch Health vs. Richardson Electronics |
| HCA Healthcare vs. Richter Gedeon Vegyszeti | HCA Healthcare vs. Charoen Pokphand Foods | HCA Healthcare vs. Superior Plus Corp | HCA Healthcare vs. Origin Agritech |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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