Correlation Between Alphabet and Bausch
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By analyzing existing cross correlation between Alphabet Inc Class C and Bausch Health Companies, you can compare the effects of market volatilities on Alphabet and Bausch 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 Alphabet with a short position of Bausch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and Bausch.
Diversification Opportunities for Alphabet and Bausch
Very poor diversification
The 3 months correlation between Alphabet and Bausch is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C 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 Alphabet 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 Alphabet Inc Class C are associated (or correlated) with Bausch. 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 Alphabet i.e., Alphabet and Bausch go up and down completely randomly.
Pair Corralation between Alphabet and Bausch
Given the investment horizon of 90 days Alphabet Inc Class C is expected to generate 0.79 times more return on investment than Bausch. However, Alphabet Inc Class C is 1.27 times less risky than Bausch. It trades about 0.07 of its potential returns per unit of risk. Bausch Health Companies is currently generating about -0.07 per unit of risk. If you would invest 18,176 in Alphabet Inc Class C on September 12, 2024 and sell it today you would earn a total of 477.00 from holding Alphabet Inc Class C or generate 2.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 57.14% |
| Values | Daily Returns |
Alphabet Inc Class C vs. Bausch Health Companies
Performance |
| Timeline |
| Alphabet Class C |
| Bausch Health Companies |
Alphabet and Bausch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alphabet and Bausch
The main advantage of trading using opposite Alphabet and Bausch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet position performs unexpectedly, Bausch 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 will offset losses from the drop in Bausch's long position.The idea behind Alphabet Inc Class C and Bausch Health Companies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Bausch vs. Acco Brands | Bausch vs. John Wiley Sons | Bausch vs. Universal Technical Institute | Bausch vs. Delek Logistics Partners |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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