Correlation Between Bausch Health and STELLA JONES
Can any of the company-specific risk be diversified away by investing in both Bausch Health and STELLA JONES 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 STELLA JONES 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 STELLA JONES INC, you can compare the effects of market volatilities on Bausch Health and STELLA JONES 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 STELLA JONES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and STELLA JONES.
Diversification Opportunities for Bausch Health and STELLA JONES
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bausch and STELLA is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and STELLA JONES INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STELLA JONES INC 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 STELLA JONES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STELLA JONES INC has no effect on the direction of Bausch Health i.e., Bausch Health and STELLA JONES go up and down completely randomly.
Pair Corralation between Bausch Health and STELLA JONES
Assuming the 90 days horizon Bausch Health Companies is expected to under-perform the STELLA JONES. But the stock apears to be less risky and, when comparing its historical volatility, Bausch Health Companies is 1.04 times less risky than STELLA JONES. The stock trades about -0.1 of its potential returns per unit of risk. The STELLA JONES INC is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 4,692 in STELLA JONES INC on September 14, 2024 and sell it today you would earn a total of 28.00 from holding STELLA JONES INC or generate 0.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bausch Health Companies vs. STELLA JONES INC
Performance |
| Timeline |
| Bausch Health Companies |
| STELLA JONES INC |
Bausch Health and STELLA JONES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and STELLA JONES
The main advantage of trading using opposite Bausch Health and STELLA JONES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, STELLA JONES 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 STELLA JONES will offset losses from the drop in STELLA JONES'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 |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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