Correlation Between Bausch Health and Tower Semiconductor
Can any of the company-specific risk be diversified away by investing in both Bausch Health and Tower Semiconductor 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 Tower Semiconductor 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 Tower Semiconductor, you can compare the effects of market volatilities on Bausch Health and Tower Semiconductor 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 Tower Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and Tower Semiconductor.
Diversification Opportunities for Bausch Health and Tower Semiconductor
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bausch and Tower is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and Tower Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tower Semiconductor 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 Tower Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tower Semiconductor has no effect on the direction of Bausch Health i.e., Bausch Health and Tower Semiconductor go up and down completely randomly.
Pair Corralation between Bausch Health and Tower Semiconductor
Assuming the 90 days horizon Bausch Health is expected to generate 6.09 times less return on investment than Tower Semiconductor. But when comparing it to its historical volatility, Bausch Health Companies is 1.26 times less risky than Tower Semiconductor. It trades about 0.03 of its potential returns per unit of risk. Tower Semiconductor is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 3,873 in Tower Semiconductor on August 30, 2024 and sell it today you would earn a total of 727.00 from holding Tower Semiconductor or generate 18.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
Bausch Health Companies vs. Tower Semiconductor
Performance |
| Timeline |
| Bausch Health Companies |
| Tower Semiconductor |
Bausch Health and Tower Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and Tower Semiconductor
The main advantage of trading using opposite Bausch Health and Tower Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, Tower Semiconductor 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 Tower Semiconductor will offset losses from the drop in Tower Semiconductor'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 |
| Tower Semiconductor vs. Texas Instruments Incorporated | Tower Semiconductor vs. Advanced Micro Devices | Tower Semiconductor vs. Advanced Micro Devices |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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