Correlation Between Bausch Health and BankUnited
Can any of the company-specific risk be diversified away by investing in both Bausch Health and BankUnited 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 BankUnited 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 BankUnited, you can compare the effects of market volatilities on Bausch Health and BankUnited 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 BankUnited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and BankUnited.
Diversification Opportunities for Bausch Health and BankUnited
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bausch and BankUnited is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and BankUnited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankUnited 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 BankUnited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankUnited has no effect on the direction of Bausch Health i.e., Bausch Health and BankUnited go up and down completely randomly.
Pair Corralation between Bausch Health and BankUnited
Assuming the 90 days horizon Bausch Health is expected to generate 1.17 times less return on investment than BankUnited. In addition to that, Bausch Health is 1.46 times more volatile than BankUnited. It trades about 0.04 of its total potential returns per unit of risk. BankUnited is currently generating about 0.07 per unit of volatility. If you would invest 2,823 in BankUnited on September 14, 2024 and sell it today you would earn a total of 1,057 from holding BankUnited or generate 37.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bausch Health Companies vs. BankUnited
Performance |
| Timeline |
| Bausch Health Companies |
| BankUnited |
Bausch Health and BankUnited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and BankUnited
The main advantage of trading using opposite Bausch Health and BankUnited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, BankUnited 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 BankUnited will offset losses from the drop in BankUnited'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 |
| BankUnited vs. Sekisui Chemical Co | BankUnited vs. Soken Chemical Engineering | BankUnited vs. Eastman Chemical | BankUnited vs. Bausch Health Companies |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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