Correlation Between Bausch Health and National Health
Can any of the company-specific risk be diversified away by investing in both Bausch Health and National Health 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 National Health 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 National Health Investors, you can compare the effects of market volatilities on Bausch Health and National Health 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 National Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and National Health.
Diversification Opportunities for Bausch Health and National Health
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bausch and National is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and National Health Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Health Investors 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 National Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Health Investors has no effect on the direction of Bausch Health i.e., Bausch Health and National Health go up and down completely randomly.
Pair Corralation between Bausch Health and National Health
Assuming the 90 days horizon Bausch Health is expected to generate 1.43 times less return on investment than National Health. In addition to that, Bausch Health is 2.1 times more volatile than National Health Investors. It trades about 0.04 of its total potential returns per unit of risk. National Health Investors is currently generating about 0.12 per unit of volatility. If you would invest 4,650 in National Health Investors on August 26, 2024 and sell it today you would earn a total of 2,700 from holding National Health Investors or generate 58.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bausch Health Companies vs. National Health Investors
Performance |
| Timeline |
| Bausch Health Companies |
| National Health Investors |
Bausch Health and National Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and National Health
The main advantage of trading using opposite Bausch Health and National Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, National Health 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 National Health will offset losses from the drop in National Health's long position.| Bausch Health vs. Shionogi Co | Bausch Health vs. Ipsen SA | Bausch Health vs. Dr Reddys Laboratories | Bausch Health vs. Superior Plus Corp |
| National Health vs. Apple Inc | National Health vs. Apple Inc | National Health vs. Apple Inc | National Health vs. Apple Inc |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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