Correlation Between Bausch Health and Iridium Communications
Can any of the company-specific risk be diversified away by investing in both Bausch Health and Iridium Communications 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 Iridium Communications 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 Iridium Communications, you can compare the effects of market volatilities on Bausch Health and Iridium Communications 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 Iridium Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and Iridium Communications.
Diversification Opportunities for Bausch Health and Iridium Communications
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bausch and Iridium is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and Iridium Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iridium Communications 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 Iridium Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iridium Communications has no effect on the direction of Bausch Health i.e., Bausch Health and Iridium Communications go up and down completely randomly.
Pair Corralation between Bausch Health and Iridium Communications
Assuming the 90 days horizon Bausch Health Companies is expected to under-perform the Iridium Communications. In addition to that, Bausch Health is 1.59 times more volatile than Iridium Communications. It trades about -0.12 of its total potential returns per unit of risk. Iridium Communications is currently generating about 0.18 per unit of volatility. If you would invest 2,658 in Iridium Communications on September 19, 2024 and sell it today you would earn a total of 210.00 from holding Iridium Communications or generate 7.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bausch Health Companies vs. Iridium Communications
Performance |
| Timeline |
| Bausch Health Companies |
| Iridium Communications |
Bausch Health and Iridium Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and Iridium Communications
The main advantage of trading using opposite Bausch Health and Iridium Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, Iridium Communications 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 Iridium Communications will offset losses from the drop in Iridium Communications' long position.| Bausch Health vs. Shionogi Co | Bausch Health vs. Dr Reddys Laboratories | Bausch Health vs. Superior Plus Corp | Bausch Health vs. NMI Holdings |
| Iridium Communications vs. Superior Plus Corp | Iridium Communications vs. SIVERS SEMICONDUCTORS AB | Iridium Communications vs. Norsk Hydro ASA | Iridium Communications vs. Reliance Steel Aluminum |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |