Correlation Between Bausch Health and EHEALTH
Can any of the company-specific risk be diversified away by investing in both Bausch Health and EHEALTH 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 EHEALTH 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 EHEALTH, you can compare the effects of market volatilities on Bausch Health and EHEALTH 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 EHEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and EHEALTH.
Diversification Opportunities for Bausch Health and EHEALTH
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bausch and EHEALTH is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and EHEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EHEALTH 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 EHEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EHEALTH has no effect on the direction of Bausch Health i.e., Bausch Health and EHEALTH go up and down completely randomly.
Pair Corralation between Bausch Health and EHEALTH
Assuming the 90 days horizon Bausch Health Companies is expected to generate 0.89 times more return on investment than EHEALTH. However, Bausch Health Companies is 1.12 times less risky than EHEALTH. It trades about 0.08 of its potential returns per unit of risk. EHEALTH is currently generating about 0.02 per unit of risk. If you would invest 577.00 in Bausch Health Companies on September 2, 2024 and sell it today you would earn a total of 206.00 from holding Bausch Health Companies or generate 35.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bausch Health Companies vs. EHEALTH
Performance |
| Timeline |
| Bausch Health Companies |
| EHEALTH |
Bausch Health and EHEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and EHEALTH
The main advantage of trading using opposite Bausch Health and EHEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, EHEALTH 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 EHEALTH will offset losses from the drop in EHEALTH's long position.| Bausch Health vs. Vulcan Materials | Bausch Health vs. ARROW ELECTRONICS | Bausch Health vs. Arrow Electronics | Bausch Health vs. Richardson Electronics |
| EHEALTH vs. SIVERS SEMICONDUCTORS AB | EHEALTH vs. Darden Restaurants | EHEALTH vs. Reliance Steel Aluminum | EHEALTH vs. Q2M Managementberatung AG |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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