Correlation Between Bausch Health and EDISON INTL
Can any of the company-specific risk be diversified away by investing in both Bausch Health and EDISON INTL 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 EDISON INTL 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 EDISON INTL, you can compare the effects of market volatilities on Bausch Health and EDISON INTL 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 EDISON INTL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and EDISON INTL.
Diversification Opportunities for Bausch Health and EDISON INTL
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bausch and EDISON is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and EDISON INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EDISON INTL 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 EDISON INTL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EDISON INTL has no effect on the direction of Bausch Health i.e., Bausch Health and EDISON INTL go up and down completely randomly.
Pair Corralation between Bausch Health and EDISON INTL
Assuming the 90 days horizon Bausch Health Companies is expected to generate 2.14 times more return on investment than EDISON INTL. However, Bausch Health is 2.14 times more volatile than EDISON INTL. It trades about 0.07 of its potential returns per unit of risk. EDISON INTL is currently generating about 0.03 per unit of risk. If you would invest 736.00 in Bausch Health Companies on September 13, 2024 and sell it today you would earn a total of 58.00 from holding Bausch Health Companies or generate 7.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.73% |
| Values | Daily Returns |
Bausch Health Companies vs. EDISON INTL
Performance |
| Timeline |
| Bausch Health Companies |
| EDISON INTL |
Bausch Health and EDISON INTL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and EDISON INTL
The main advantage of trading using opposite Bausch Health and EDISON INTL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, EDISON INTL 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 EDISON INTL will offset losses from the drop in EDISON INTL'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 |
| EDISON INTL vs. Carnegie Clean Energy | EDISON INTL vs. MOVIE GAMES SA | EDISON INTL vs. SIDETRADE EO 1 | EDISON INTL vs. Canon Marketing Japan |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |