Correlation Between NI Holdings and Bausch Lomb
Can any of the company-specific risk be diversified away by investing in both NI Holdings 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 NI Holdings and Bausch Lomb into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NI Holdings and Bausch Lomb Corp, you can compare the effects of market volatilities on NI Holdings 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 NI Holdings with a short position of Bausch Lomb. Check out your portfolio center. Please also check ongoing floating volatility patterns of NI Holdings and Bausch Lomb.
Diversification Opportunities for NI Holdings and Bausch Lomb
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NODK and Bausch is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding NI Holdings 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 NI Holdings 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 NI Holdings 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 NI Holdings i.e., NI Holdings and Bausch Lomb go up and down completely randomly.
Pair Corralation between NI Holdings and Bausch Lomb
Given the investment horizon of 90 days NI Holdings is expected to generate 0.92 times more return on investment than Bausch Lomb. However, NI Holdings is 1.08 times less risky than Bausch Lomb. It trades about 0.15 of its potential returns per unit of risk. Bausch Lomb Corp is currently generating about -0.02 per unit of risk. If you would invest 1,544 in NI Holdings on September 5, 2024 and sell it today you would earn a total of 69.00 from holding NI Holdings or generate 4.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NI Holdings vs. Bausch Lomb Corp
Performance |
| Timeline |
| NI Holdings |
| Bausch Lomb Corp |
NI Holdings and Bausch Lomb Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NI Holdings and Bausch Lomb
The main advantage of trading using opposite NI Holdings and Bausch Lomb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NI Holdings 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.| NI Holdings vs. Horace Mann Educators | NI Holdings vs. Donegal Group A | NI Holdings vs. Global Indemnity PLC | NI Holdings vs. Selective Insurance Group |
| 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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