Correlation Between ICU Medical and Bausch Lomb
Can any of the company-specific risk be diversified away by investing in both ICU Medical 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 ICU Medical and Bausch Lomb into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ICU Medical and Bausch Lomb Corp, you can compare the effects of market volatilities on ICU Medical 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 ICU Medical with a short position of Bausch Lomb. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICU Medical and Bausch Lomb.
Diversification Opportunities for ICU Medical and Bausch Lomb
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ICU and Bausch is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding ICU Medical 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 ICU Medical 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 ICU Medical 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 ICU Medical i.e., ICU Medical and Bausch Lomb go up and down completely randomly.
Pair Corralation between ICU Medical and Bausch Lomb
Given the investment horizon of 90 days ICU Medical is expected to under-perform the Bausch Lomb. But the stock apears to be less risky and, when comparing its historical volatility, ICU Medical is 1.28 times less risky than Bausch Lomb. The stock trades about -0.11 of its potential returns per unit of risk. The Bausch Lomb Corp is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 2,037 in Bausch Lomb Corp on August 27, 2024 and sell it today you would lose (70.00) from holding Bausch Lomb Corp or give up 3.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ICU Medical vs. Bausch Lomb Corp
Performance |
| Timeline |
| ICU Medical |
| Bausch Lomb Corp |
ICU Medical and Bausch Lomb Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ICU Medical and Bausch Lomb
The main advantage of trading using opposite ICU Medical and Bausch Lomb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICU Medical 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.| ICU Medical vs. Merit Medical Systems | ICU Medical vs. The Cooper Companies, | ICU Medical vs. AngioDynamics | ICU Medical vs. AptarGroup |
| 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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