Correlation Between Bausch Health and AHOLD DELHAIADR16
Can any of the company-specific risk be diversified away by investing in both Bausch Health and AHOLD DELHAIADR16 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 AHOLD DELHAIADR16 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 AHOLD DELHAIADR16 EO 25, you can compare the effects of market volatilities on Bausch Health and AHOLD DELHAIADR16 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 AHOLD DELHAIADR16. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and AHOLD DELHAIADR16.
Diversification Opportunities for Bausch Health and AHOLD DELHAIADR16
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bausch and AHOLD is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and AHOLD DELHAIADR16 EO 25 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AHOLD DELHAIADR16 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 AHOLD DELHAIADR16. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AHOLD DELHAIADR16 has no effect on the direction of Bausch Health i.e., Bausch Health and AHOLD DELHAIADR16 go up and down completely randomly.
Pair Corralation between Bausch Health and AHOLD DELHAIADR16
Assuming the 90 days horizon Bausch Health Companies is expected to under-perform the AHOLD DELHAIADR16. In addition to that, Bausch Health is 1.53 times more volatile than AHOLD DELHAIADR16 EO 25. It trades about -0.34 of its total potential returns per unit of risk. AHOLD DELHAIADR16 EO 25 is currently generating about 0.27 per unit of volatility. If you would invest 3,000 in AHOLD DELHAIADR16 EO 25 on September 3, 2024 and sell it today you would earn a total of 200.00 from holding AHOLD DELHAIADR16 EO 25 or generate 6.67% 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. AHOLD DELHAIADR16 EO 25
Performance |
| Timeline |
| Bausch Health Companies |
| AHOLD DELHAIADR16 |
Bausch Health and AHOLD DELHAIADR16 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and AHOLD DELHAIADR16
The main advantage of trading using opposite Bausch Health and AHOLD DELHAIADR16 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, AHOLD DELHAIADR16 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 AHOLD DELHAIADR16 will offset losses from the drop in AHOLD DELHAIADR16's long position.The idea behind Bausch Health Companies and AHOLD DELHAIADR16 EO 25 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| AHOLD DELHAIADR16 vs. Martin Marietta Materials | AHOLD DELHAIADR16 vs. TOREX SEMICONDUCTOR LTD | AHOLD DELHAIADR16 vs. MagnaChip Semiconductor Corp | AHOLD DELHAIADR16 vs. Taiwan Semiconductor Manufacturing |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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