Correlation Between Bausch Health and Fifth Third
Can any of the company-specific risk be diversified away by investing in both Bausch Health and Fifth Third 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 Fifth Third 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 Fifth Third Bancorp, you can compare the effects of market volatilities on Bausch Health and Fifth Third 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 Fifth Third. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and Fifth Third.
Diversification Opportunities for Bausch Health and Fifth Third
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bausch and Fifth is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and Fifth Third Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fifth Third Bancorp 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 Fifth Third. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fifth Third Bancorp has no effect on the direction of Bausch Health i.e., Bausch Health and Fifth Third go up and down completely randomly.
Pair Corralation between Bausch Health and Fifth Third
Assuming the 90 days horizon Bausch Health is expected to generate 3.35 times less return on investment than Fifth Third. In addition to that, Bausch Health is 1.72 times more volatile than Fifth Third Bancorp. It trades about 0.05 of its total potential returns per unit of risk. Fifth Third Bancorp is currently generating about 0.27 per unit of volatility. If you would invest 4,067 in Fifth Third Bancorp on September 1, 2024 and sell it today you would earn a total of 526.00 from holding Fifth Third Bancorp or generate 12.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Bausch Health Companies vs. Fifth Third Bancorp
Performance |
| Timeline |
| Bausch Health Companies |
| Fifth Third Bancorp |
Bausch Health and Fifth Third Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and Fifth Third
The main advantage of trading using opposite Bausch Health and Fifth Third positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, Fifth Third 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 Fifth Third will offset losses from the drop in Fifth Third's long position.| Bausch Health vs. Eisai Co | Bausch Health vs. Shionogi Co | Bausch Health vs. Superior Plus Corp | Bausch Health vs. Origin Agritech |
| Fifth Third vs. UNIVMUSIC GRPADR050 | Fifth Third vs. Gladstone Investment | Fifth Third vs. NORWEGIAN AIR SHUT | Fifth Third vs. CapitaLand Investment Limited |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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