Correlation Between DRI Healthcare and Bausch Health
Can any of the company-specific risk be diversified away by investing in both DRI Healthcare and Bausch 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 DRI Healthcare and Bausch Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DRI Healthcare Trust and Bausch Health Companies, you can compare the effects of market volatilities on DRI Healthcare and Bausch 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 DRI Healthcare with a short position of Bausch Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of DRI Healthcare and Bausch Health.
Diversification Opportunities for DRI Healthcare and Bausch Health
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DRI and Bausch is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding DRI Healthcare Trust and Bausch Health Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bausch Health Companies and DRI Healthcare 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 DRI Healthcare Trust are associated (or correlated) with Bausch Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bausch Health Companies has no effect on the direction of DRI Healthcare i.e., DRI Healthcare and Bausch Health go up and down completely randomly.
Pair Corralation between DRI Healthcare and Bausch Health
Assuming the 90 days trading horizon DRI Healthcare Trust is expected to under-perform the Bausch Health. But the stock apears to be less risky and, when comparing its historical volatility, DRI Healthcare Trust is 1.08 times less risky than Bausch Health. The stock trades about -0.26 of its potential returns per unit of risk. The Bausch Health Companies is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest 1,289 in Bausch Health Companies on September 3, 2024 and sell it today you would lose (94.00) from holding Bausch Health Companies or give up 7.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DRI Healthcare Trust vs. Bausch Health Companies
Performance |
| Timeline |
| DRI Healthcare Trust |
| Bausch Health Companies |
DRI Healthcare and Bausch Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DRI Healthcare and Bausch Health
The main advantage of trading using opposite DRI Healthcare and Bausch Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DRI Healthcare position performs unexpectedly, Bausch 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 Bausch Health will offset losses from the drop in Bausch Health's long position.| DRI Healthcare vs. Westaim Corp | DRI Healthcare vs. Pulse Seismic | DRI Healthcare vs. Quarterhill | DRI Healthcare vs. TECSYS Inc |
| Bausch Health vs. Westaim Corp | Bausch Health vs. Pulse Seismic | Bausch Health vs. Quarterhill | Bausch Health vs. TECSYS 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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