Correlation Between PROSIEBENSAT1 MEDIADR4/ and Bausch Health
Can any of the company-specific risk be diversified away by investing in both PROSIEBENSAT1 MEDIADR4/ 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 PROSIEBENSAT1 MEDIADR4/ and Bausch Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PROSIEBENSAT1 MEDIADR4 and Bausch Health Companies, you can compare the effects of market volatilities on PROSIEBENSAT1 MEDIADR4/ 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 PROSIEBENSAT1 MEDIADR4/ with a short position of Bausch Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of PROSIEBENSAT1 MEDIADR4/ and Bausch Health.
Diversification Opportunities for PROSIEBENSAT1 MEDIADR4/ and Bausch Health
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PROSIEBENSAT1 and Bausch is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding PROSIEBENSAT1 MEDIADR4 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 PROSIEBENSAT1 MEDIADR4/ 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 PROSIEBENSAT1 MEDIADR4 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 PROSIEBENSAT1 MEDIADR4/ i.e., PROSIEBENSAT1 MEDIADR4/ and Bausch Health go up and down completely randomly.
Pair Corralation between PROSIEBENSAT1 MEDIADR4/ and Bausch Health
Assuming the 90 days trading horizon PROSIEBENSAT1 MEDIADR4/ is expected to generate 1.54 times less return on investment than Bausch Health. But when comparing it to its historical volatility, PROSIEBENSAT1 MEDIADR4 is 1.04 times less risky than Bausch Health. It trades about 0.01 of its potential returns per unit of risk. Bausch Health Companies is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 719.00 in Bausch Health Companies on September 24, 2024 and sell it today you would lose (15.00) from holding Bausch Health Companies or give up 2.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PROSIEBENSAT1 MEDIADR4 vs. Bausch Health Companies
Performance |
| Timeline |
| PROSIEBENSAT1 MEDIADR4/ |
| Bausch Health Companies |
PROSIEBENSAT1 MEDIADR4/ and Bausch Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PROSIEBENSAT1 MEDIADR4/ and Bausch Health
The main advantage of trading using opposite PROSIEBENSAT1 MEDIADR4/ and Bausch Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PROSIEBENSAT1 MEDIADR4/ 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.| PROSIEBENSAT1 MEDIADR4/ vs. Apple Inc | PROSIEBENSAT1 MEDIADR4/ vs. Apple Inc | PROSIEBENSAT1 MEDIADR4/ vs. Apple Inc | PROSIEBENSAT1 MEDIADR4/ vs. Apple Inc |
| Bausch Health vs. New Residential Investment | Bausch Health vs. PROSIEBENSAT1 MEDIADR4 | Bausch Health vs. Seven West Media | Bausch Health vs. CDL INVESTMENT |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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