Correlation Between H2O Retailing and Bausch Health
Can any of the company-specific risk be diversified away by investing in both H2O Retailing 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 H2O Retailing and Bausch Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between H2O Retailing and Bausch Health Companies, you can compare the effects of market volatilities on H2O Retailing 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 H2O Retailing with a short position of Bausch Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of H2O Retailing and Bausch Health.
Diversification Opportunities for H2O Retailing and Bausch Health
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between H2O and Bausch is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding H2O Retailing 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 H2O Retailing 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 H2O Retailing 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 H2O Retailing i.e., H2O Retailing and Bausch Health go up and down completely randomly.
Pair Corralation between H2O Retailing and Bausch Health
Assuming the 90 days horizon H2O Retailing is expected to generate 0.63 times more return on investment than Bausch Health. However, H2O Retailing is 1.6 times less risky than Bausch Health. It trades about 0.08 of its potential returns per unit of risk. Bausch Health Companies is currently generating about -0.11 per unit of risk. If you would invest 1,400 in H2O Retailing on November 3, 2024 and sell it today you would earn a total of 30.00 from holding H2O Retailing or generate 2.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
H2O Retailing vs. Bausch Health Companies
Performance |
| Timeline |
| H2O Retailing |
| Bausch Health Companies |
H2O Retailing and Bausch Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with H2O Retailing and Bausch Health
The main advantage of trading using opposite H2O Retailing and Bausch Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H2O Retailing 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.| H2O Retailing vs. MHP Hotel AG | H2O Retailing vs. COVIVIO HOTELS INH | H2O Retailing vs. DALATA HOTEL | H2O Retailing vs. CENTURIA OFFICE REIT |
| Bausch Health vs. Scientific Games | Bausch Health vs. Perdoceo Education | Bausch Health vs. TAL Education Group | Bausch Health vs. OURGAME INTHOLDL 00005 |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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