Correlation Between Bausch Health and Medibank Private
Can any of the company-specific risk be diversified away by investing in both Bausch Health and Medibank Private 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 Medibank Private 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 Medibank Private Limited, you can compare the effects of market volatilities on Bausch Health and Medibank Private 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 Medibank Private. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and Medibank Private.
Diversification Opportunities for Bausch Health and Medibank Private
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bausch and Medibank is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and Medibank Private Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medibank Private 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 Medibank Private. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medibank Private has no effect on the direction of Bausch Health i.e., Bausch Health and Medibank Private go up and down completely randomly.
Pair Corralation between Bausch Health and Medibank Private
Assuming the 90 days horizon Bausch Health Companies is expected to generate 1.42 times more return on investment than Medibank Private. However, Bausch Health is 1.42 times more volatile than Medibank Private Limited. It trades about 0.04 of its potential returns per unit of risk. Medibank Private Limited is currently generating about 0.04 per unit of risk. If you would invest 670.00 in Bausch Health Companies on September 4, 2024 and sell it today you would earn a total of 113.00 from holding Bausch Health Companies or generate 16.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Bausch Health Companies vs. Medibank Private Limited
Performance |
| Timeline |
| Bausch Health Companies |
| Medibank Private |
Bausch Health and Medibank Private Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and Medibank Private
The main advantage of trading using opposite Bausch Health and Medibank Private positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, Medibank Private 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 Medibank Private will offset losses from the drop in Medibank Private's long position.The idea behind Bausch Health Companies and Medibank Private Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Medibank Private vs. Bausch Health Companies | Medibank Private vs. Fukuyama Transporting Co | Medibank Private vs. Diamondrock Hospitality Co | Medibank Private vs. TITANIUM TRANSPORTGROUP |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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