Correlation Between HNI Corp and Bausch Lomb
Can any of the company-specific risk be diversified away by investing in both HNI Corp 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 HNI Corp and Bausch Lomb into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HNI Corp and Bausch Lomb Corp, you can compare the effects of market volatilities on HNI Corp 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 HNI Corp with a short position of Bausch Lomb. Check out your portfolio center. Please also check ongoing floating volatility patterns of HNI Corp and Bausch Lomb.
Diversification Opportunities for HNI Corp and Bausch Lomb
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between HNI and Bausch is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding HNI Corp 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 HNI Corp 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 HNI Corp 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 HNI Corp i.e., HNI Corp and Bausch Lomb go up and down completely randomly.
Pair Corralation between HNI Corp and Bausch Lomb
Considering the 90-day investment horizon HNI Corp is expected to generate 0.84 times more return on investment than Bausch Lomb. However, HNI Corp is 1.19 times less risky than Bausch Lomb. It trades about 0.09 of its potential returns per unit of risk. Bausch Lomb Corp is currently generating about 0.03 per unit of risk. If you would invest 2,662 in HNI Corp on August 27, 2024 and sell it today you would earn a total of 2,955 from holding HNI Corp or generate 111.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HNI Corp vs. Bausch Lomb Corp
Performance |
| Timeline |
| HNI Corp |
| Bausch Lomb Corp |
HNI Corp and Bausch Lomb Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HNI Corp and Bausch Lomb
The main advantage of trading using opposite HNI Corp and Bausch Lomb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HNI Corp 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.The idea behind HNI Corp and Bausch Lomb Corp 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 Lomb vs. The Cooper Companies, | Bausch Lomb vs. ICU Medical | Bausch Lomb vs. Hologic | Bausch Lomb vs. Becton Dickinson and |
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 Stocks Directory module to find actively traded stocks across global markets.
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