Correlation Between Bausch Health and Chevron
Can any of the company-specific risk be diversified away by investing in both Bausch Health and Chevron 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 Chevron 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 Chevron, you can compare the effects of market volatilities on Bausch Health and Chevron 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 Chevron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and Chevron.
Diversification Opportunities for Bausch Health and Chevron
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bausch and Chevron is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and Chevron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron 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 Chevron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chevron has no effect on the direction of Bausch Health i.e., Bausch Health and Chevron go up and down completely randomly.
Pair Corralation between Bausch Health and Chevron
Assuming the 90 days horizon Bausch Health Companies is expected to under-perform the Chevron. In addition to that, Bausch Health is 2.68 times more volatile than Chevron. It trades about -0.14 of its total potential returns per unit of risk. Chevron is currently generating about -0.07 per unit of volatility. If you would invest 15,113 in Chevron on September 15, 2024 and sell it today you would lose (319.00) from holding Chevron or give up 2.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bausch Health Companies vs. Chevron
Performance |
| Timeline |
| Bausch Health Companies |
| Chevron |
Bausch Health and Chevron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and Chevron
The main advantage of trading using opposite Bausch Health and Chevron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, Chevron 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 Chevron will offset losses from the drop in Chevron'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 |
| Chevron vs. Auto Trader Group | Chevron vs. EPSILON HEALTHCARE LTD | Chevron vs. TRADEGATE | Chevron 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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