Correlation Between Bausch Health and COSTCO WHOLESALE
Can any of the company-specific risk be diversified away by investing in both Bausch Health and COSTCO WHOLESALE 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 COSTCO WHOLESALE 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 COSTCO WHOLESALE CDR, you can compare the effects of market volatilities on Bausch Health and COSTCO WHOLESALE 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 COSTCO WHOLESALE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and COSTCO WHOLESALE.
Diversification Opportunities for Bausch Health and COSTCO WHOLESALE
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bausch and COSTCO is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and COSTCO WHOLESALE CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSTCO WHOLESALE CDR 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 COSTCO WHOLESALE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSTCO WHOLESALE CDR has no effect on the direction of Bausch Health i.e., Bausch Health and COSTCO WHOLESALE go up and down completely randomly.
Pair Corralation between Bausch Health and COSTCO WHOLESALE
Assuming the 90 days horizon Bausch Health is expected to generate 3.47 times less return on investment than COSTCO WHOLESALE. In addition to that, Bausch Health is 1.79 times more volatile than COSTCO WHOLESALE CDR. It trades about 0.03 of its total potential returns per unit of risk. COSTCO WHOLESALE CDR is currently generating about 0.16 per unit of volatility. If you would invest 2,675 in COSTCO WHOLESALE CDR on August 30, 2024 and sell it today you would earn a total of 305.00 from holding COSTCO WHOLESALE CDR or generate 11.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
Bausch Health Companies vs. COSTCO WHOLESALE CDR
Performance |
| Timeline |
| Bausch Health Companies |
| COSTCO WHOLESALE CDR |
Bausch Health and COSTCO WHOLESALE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and COSTCO WHOLESALE
The main advantage of trading using opposite Bausch Health and COSTCO WHOLESALE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, COSTCO WHOLESALE 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 COSTCO WHOLESALE will offset losses from the drop in COSTCO WHOLESALE's long position.| Bausch Health vs. Superior Plus Corp | Bausch Health vs. NMI Holdings | Bausch Health vs. SIVERS SEMICONDUCTORS AB | Bausch Health vs. Talanx AG |
| COSTCO WHOLESALE vs. Bausch Health Companies | COSTCO WHOLESALE vs. DiamondRock Hospitality | COSTCO WHOLESALE vs. EPSILON HEALTHCARE LTD | COSTCO WHOLESALE vs. HEALTHCARE REAL A |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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