Correlation Between Edgewise Therapeutics and Bausch Health
Can any of the company-specific risk be diversified away by investing in both Edgewise Therapeutics 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 Edgewise Therapeutics and Bausch Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edgewise Therapeutics and Bausch Health Companies, you can compare the effects of market volatilities on Edgewise Therapeutics 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 Edgewise Therapeutics with a short position of Bausch Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edgewise Therapeutics and Bausch Health.
Diversification Opportunities for Edgewise Therapeutics and Bausch Health
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Edgewise and Bausch is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Edgewise Therapeutics 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 Edgewise Therapeutics 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 Edgewise Therapeutics 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 Edgewise Therapeutics i.e., Edgewise Therapeutics and Bausch Health go up and down completely randomly.
Pair Corralation between Edgewise Therapeutics and Bausch Health
Given the investment horizon of 90 days Edgewise Therapeutics is expected to generate 1.49 times more return on investment than Bausch Health. However, Edgewise Therapeutics is 1.49 times more volatile than Bausch Health Companies. It trades about 0.08 of its potential returns per unit of risk. Bausch Health Companies is currently generating about 0.02 per unit of risk. If you would invest 834.00 in Edgewise Therapeutics on August 27, 2024 and sell it today you would earn a total of 2,386 from holding Edgewise Therapeutics or generate 286.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Edgewise Therapeutics vs. Bausch Health Companies
Performance |
| Timeline |
| Edgewise Therapeutics |
| Bausch Health Companies |
Edgewise Therapeutics and Bausch Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edgewise Therapeutics and Bausch Health
The main advantage of trading using opposite Edgewise Therapeutics and Bausch Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edgewise Therapeutics 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.| Edgewise Therapeutics vs. Century Therapeutics | Edgewise Therapeutics vs. C4 Therapeutics | Edgewise Therapeutics vs. Mineralys Therapeutics, Common | Edgewise Therapeutics vs. Cullinan Oncology LLC |
| Bausch Health vs. Viatris | Bausch Health vs. Catalent | Bausch Health vs. Tilray Inc | Bausch Health vs. Zoetis 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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