Correlation Between Indivior PLC and Bausch Health
Can any of the company-specific risk be diversified away by investing in both Indivior PLC 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 Indivior PLC and Bausch Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indivior PLC and Bausch Health Companies, you can compare the effects of market volatilities on Indivior PLC 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 Indivior PLC with a short position of Bausch Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indivior PLC and Bausch Health.
Diversification Opportunities for Indivior PLC and Bausch Health
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Indivior and Bausch is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Indivior PLC 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 Indivior PLC 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 Indivior PLC 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 Indivior PLC i.e., Indivior PLC and Bausch Health go up and down completely randomly.
Pair Corralation between Indivior PLC and Bausch Health
Assuming the 90 days horizon Indivior PLC is expected to generate 0.89 times more return on investment than Bausch Health. However, Indivior PLC is 1.12 times less risky than Bausch Health. It trades about 0.14 of its potential returns per unit of risk. Bausch Health Companies is currently generating about 0.03 per unit of risk. If you would invest 2,160 in Indivior PLC on August 31, 2024 and sell it today you would earn a total of 234.00 from holding Indivior PLC or generate 10.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 8.56% |
| Values | Daily Returns |
Indivior PLC vs. Bausch Health Companies
Performance |
| Timeline |
| Indivior PLC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Bausch Health Companies |
Indivior PLC and Bausch Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indivior PLC and Bausch Health
The main advantage of trading using opposite Indivior PLC and Bausch Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indivior PLC 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.| Indivior PLC vs. Emergent Biosolutions | Indivior PLC vs. Hypera SA | Indivior PLC vs. YourWay Cannabis Brands | Indivior PLC vs. Cumberland Pharmaceuticals |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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