Correlation Between Bausch Health and Takeda Pharmaceutical
Can any of the company-specific risk be diversified away by investing in both Bausch Health and Takeda Pharmaceutical 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 Takeda Pharmaceutical 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 Takeda Pharmaceutical, you can compare the effects of market volatilities on Bausch Health and Takeda Pharmaceutical 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 Takeda Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and Takeda Pharmaceutical.
Diversification Opportunities for Bausch Health and Takeda Pharmaceutical
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bausch and Takeda is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and Takeda Pharmaceutical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Takeda Pharmaceutical 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 Takeda Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Takeda Pharmaceutical has no effect on the direction of Bausch Health i.e., Bausch Health and Takeda Pharmaceutical go up and down completely randomly.
Pair Corralation between Bausch Health and Takeda Pharmaceutical
Assuming the 90 days horizon Bausch Health Companies is expected to generate 2.99 times more return on investment than Takeda Pharmaceutical. However, Bausch Health is 2.99 times more volatile than Takeda Pharmaceutical. It trades about 0.02 of its potential returns per unit of risk. Takeda Pharmaceutical is currently generating about -0.01 per unit of risk. If you would invest 702.00 in Bausch Health Companies on August 30, 2024 and sell it today you would earn a total of 41.00 from holding Bausch Health Companies or generate 5.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bausch Health Companies vs. Takeda Pharmaceutical
Performance |
| Timeline |
| Bausch Health Companies |
| Takeda Pharmaceutical |
Bausch Health and Takeda Pharmaceutical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and Takeda Pharmaceutical
The main advantage of trading using opposite Bausch Health and Takeda Pharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, Takeda Pharmaceutical 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 Takeda Pharmaceutical will offset losses from the drop in Takeda Pharmaceutical's long position.| Bausch Health vs. Superior Plus Corp | Bausch Health vs. NMI Holdings | Bausch Health vs. SIVERS SEMICONDUCTORS AB | Bausch Health vs. Talanx AG |
| Takeda Pharmaceutical vs. Superior Plus Corp | Takeda Pharmaceutical vs. NMI Holdings | Takeda Pharmaceutical vs. SIVERS SEMICONDUCTORS AB | Takeda Pharmaceutical vs. Talanx 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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