Correlation Between Nasdaq and Bausch Lomb
Can any of the company-specific risk be diversified away by investing in both Nasdaq 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 Nasdaq and Bausch Lomb into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and Bausch Lomb Corp, you can compare the effects of market volatilities on Nasdaq 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 Nasdaq with a short position of Bausch Lomb. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Bausch Lomb.
Diversification Opportunities for Nasdaq and Bausch Lomb
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nasdaq and Bausch is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc 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 Nasdaq 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 Nasdaq Inc 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 Nasdaq i.e., Nasdaq and Bausch Lomb go up and down completely randomly.
Pair Corralation between Nasdaq and Bausch Lomb
Given the investment horizon of 90 days Nasdaq is expected to generate 1.46 times less return on investment than Bausch Lomb. But when comparing it to its historical volatility, Nasdaq Inc is 1.59 times less risky than Bausch Lomb. It trades about 0.04 of its potential returns per unit of risk. Bausch Lomb Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,521 in Bausch Lomb Corp on August 25, 2024 and sell it today you would earn a total of 436.00 from holding Bausch Lomb Corp or generate 28.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq Inc vs. Bausch Lomb Corp
Performance |
| Timeline |
| Nasdaq Inc |
| Bausch Lomb Corp |
Nasdaq and Bausch Lomb Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq and Bausch Lomb
The main advantage of trading using opposite Nasdaq and Bausch Lomb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 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 Nasdaq Inc 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. Heartbeam | Bausch Lomb vs. EUDA Health Holdings | Bausch Lomb vs. Nutex Health | Bausch Lomb vs. Healthcare Triangle |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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