Correlation Between Bausch Health and Lions Gate
Can any of the company-specific risk be diversified away by investing in both Bausch Health and Lions Gate 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 Lions Gate 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 Lions Gate Entertainment, you can compare the effects of market volatilities on Bausch Health and Lions Gate 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 Lions Gate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and Lions Gate.
Diversification Opportunities for Bausch Health and Lions Gate
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bausch and Lions is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and Lions Gate Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lions Gate Entertainment 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 Lions Gate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lions Gate Entertainment has no effect on the direction of Bausch Health i.e., Bausch Health and Lions Gate go up and down completely randomly.
Pair Corralation between Bausch Health and Lions Gate
Assuming the 90 days horizon Bausch Health Companies is expected to under-perform the Lions Gate. In addition to that, Bausch Health is 1.03 times more volatile than Lions Gate Entertainment. It trades about -0.1 of its total potential returns per unit of risk. Lions Gate Entertainment is currently generating about 0.16 per unit of volatility. If you would invest 650.00 in Lions Gate Entertainment on September 14, 2024 and sell it today you would earn a total of 55.00 from holding Lions Gate Entertainment or generate 8.46% 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. Lions Gate Entertainment
Performance |
| Timeline |
| Bausch Health Companies |
| Lions Gate Entertainment |
Bausch Health and Lions Gate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and Lions Gate
The main advantage of trading using opposite Bausch Health and Lions Gate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, Lions Gate 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 Lions Gate will offset losses from the drop in Lions Gate'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 |
| Lions Gate vs. SBA Communications Corp | Lions Gate vs. Bumrungrad Hospital Public | Lions Gate vs. Bausch Health Companies | Lions Gate vs. Gamma Communications plc |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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