Correlation Between Quarterhill and Bausch Health
Can any of the company-specific risk be diversified away by investing in both Quarterhill 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 Quarterhill and Bausch Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quarterhill and Bausch Health Companies, you can compare the effects of market volatilities on Quarterhill 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 Quarterhill with a short position of Bausch Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quarterhill and Bausch Health.
Diversification Opportunities for Quarterhill and Bausch Health
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Quarterhill and Bausch is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Quarterhill 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 Quarterhill 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 Quarterhill 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 Quarterhill i.e., Quarterhill and Bausch Health go up and down completely randomly.
Pair Corralation between Quarterhill and Bausch Health
Assuming the 90 days trading horizon Quarterhill is expected to generate 1.85 times less return on investment than Bausch Health. But when comparing it to its historical volatility, Quarterhill is 1.33 times less risky than Bausch Health. It trades about 0.02 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 1,046 in Bausch Health Companies on September 3, 2024 and sell it today you would earn a total of 149.00 from holding Bausch Health Companies or generate 14.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Quarterhill vs. Bausch Health Companies
Performance |
| Timeline |
| Quarterhill |
| Bausch Health Companies |
Quarterhill and Bausch Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quarterhill and Bausch Health
The main advantage of trading using opposite Quarterhill and Bausch Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quarterhill 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.| Quarterhill vs. Enghouse Systems | Quarterhill vs. Pulse Seismic | Quarterhill vs. Harvest Global REIT | Quarterhill vs. International Zeolite Corp |
| Bausch Health vs. Westaim Corp | Bausch Health vs. Pulse Seismic | Bausch Health vs. Quarterhill | Bausch Health vs. TECSYS Inc |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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