Correlation Between Bausch Health and Townsquare Media
Can any of the company-specific risk be diversified away by investing in both Bausch Health and Townsquare Media 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 Townsquare Media 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 Townsquare Media, you can compare the effects of market volatilities on Bausch Health and Townsquare Media 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 Townsquare Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and Townsquare Media.
Diversification Opportunities for Bausch Health and Townsquare Media
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bausch and Townsquare is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and Townsquare Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Townsquare Media 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 Townsquare Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Townsquare Media has no effect on the direction of Bausch Health i.e., Bausch Health and Townsquare Media go up and down completely randomly.
Pair Corralation between Bausch Health and Townsquare Media
Assuming the 90 days horizon Bausch Health Companies is expected to under-perform the Townsquare Media. In addition to that, Bausch Health is 1.07 times more volatile than Townsquare Media. It trades about -0.13 of its total potential returns per unit of risk. Townsquare Media is currently generating about 0.0 per unit of volatility. If you would invest 930.00 in Townsquare Media on September 13, 2024 and sell it today you would lose (5.00) from holding Townsquare Media or give up 0.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Bausch Health Companies vs. Townsquare Media
Performance |
| Timeline |
| Bausch Health Companies |
| Townsquare Media |
Bausch Health and Townsquare Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and Townsquare Media
The main advantage of trading using opposite Bausch Health and Townsquare Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, Townsquare Media 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 Townsquare Media will offset losses from the drop in Townsquare Media's long position.| Bausch Health vs. Shionogi Co | Bausch Health vs. Dr Reddys Laboratories | Bausch Health vs. Superior Plus Corp | Bausch Health vs. NMI Holdings |
| Townsquare Media vs. Dairy Farm International | Townsquare Media vs. Platinum Investment Management | Townsquare Media vs. HF FOODS GRP | Townsquare Media vs. Cleanaway Waste Management |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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