Correlation Between Pool and Bausch
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By analyzing existing cross correlation between Pool Corporation and Bausch Health Companies, you can compare the effects of market volatilities on Pool and Bausch 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 Pool with a short position of Bausch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pool and Bausch.
Diversification Opportunities for Pool and Bausch
Very weak diversification
The 3 months correlation between Pool and Bausch is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Pool Corp. 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 Pool 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 Pool Corporation are associated (or correlated) with Bausch. 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 Pool i.e., Pool and Bausch go up and down completely randomly.
Pair Corralation between Pool and Bausch
Given the investment horizon of 90 days Pool is expected to generate 1.26 times less return on investment than Bausch. But when comparing it to its historical volatility, Pool Corporation is 1.06 times less risky than Bausch. It trades about 0.08 of its potential returns per unit of risk. Bausch Health Companies is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 6,400 in Bausch Health Companies on September 12, 2024 and sell it today you would earn a total of 385.00 from holding Bausch Health Companies or generate 6.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 54.69% |
| Values | Daily Returns |
Pool Corp. vs. Bausch Health Companies
Performance |
| Timeline |
| Pool |
| Bausch Health Companies |
Pool and Bausch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pool and Bausch
The main advantage of trading using opposite Pool and Bausch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pool position performs unexpectedly, Bausch 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 will offset losses from the drop in Bausch's long position.The idea behind Pool Corporation and Bausch Health Companies 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 vs. Acco Brands | Bausch vs. John Wiley Sons | Bausch vs. Universal Technical Institute | Bausch vs. Delek Logistics Partners |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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