Correlation Between Canlan Ice and Bausch Lomb
Can any of the company-specific risk be diversified away by investing in both Canlan Ice and Bausch Lomb 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 Canlan Ice and Bausch Lomb into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canlan Ice Sports and Bausch Lomb Corp, you can compare the effects of market volatilities on Canlan Ice and Bausch Lomb 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 Canlan Ice with a short position of Bausch Lomb. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canlan Ice and Bausch Lomb.
Diversification Opportunities for Canlan Ice and Bausch Lomb
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Canlan and Bausch is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Canlan Ice Sports and Bausch Lomb Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bausch Lomb Corp and Canlan Ice 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 Canlan Ice Sports are associated (or correlated) with Bausch Lomb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bausch Lomb Corp has no effect on the direction of Canlan Ice i.e., Canlan Ice and Bausch Lomb go up and down completely randomly.
Pair Corralation between Canlan Ice and Bausch Lomb
Assuming the 90 days horizon Canlan Ice is expected to generate 5.57 times less return on investment than Bausch Lomb. But when comparing it to its historical volatility, Canlan Ice Sports is 20.98 times less risky than Bausch Lomb. It trades about 0.13 of its potential returns per unit of risk. Bausch Lomb Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,525 in Bausch Lomb Corp on August 29, 2024 and sell it today you would earn a total of 472.00 from holding Bausch Lomb Corp or generate 30.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canlan Ice Sports vs. Bausch Lomb Corp
Performance |
| Timeline |
| Canlan Ice Sports |
| Bausch Lomb Corp |
Canlan Ice and Bausch Lomb Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canlan Ice and Bausch Lomb
The main advantage of trading using opposite Canlan Ice and Bausch Lomb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canlan Ice position performs unexpectedly, Bausch Lomb 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 Bausch Lomb will offset losses from the drop in Bausch Lomb's long position.| Canlan Ice vs. ANTA Sports Products | Canlan Ice vs. ANTA Sports Products | Canlan Ice vs. Carnival Plc ADS |
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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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