Correlation Between Northstar Clean and Bausch Health
Can any of the company-specific risk be diversified away by investing in both Northstar Clean 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 Northstar Clean and Bausch Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northstar Clean Technologies and Bausch Health Companies, you can compare the effects of market volatilities on Northstar Clean 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 Northstar Clean with a short position of Bausch Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northstar Clean and Bausch Health.
Diversification Opportunities for Northstar Clean and Bausch Health
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Northstar and Bausch is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Northstar Clean Technologies 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 Northstar Clean 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 Northstar Clean Technologies 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 Northstar Clean i.e., Northstar Clean and Bausch Health go up and down completely randomly.
Pair Corralation between Northstar Clean and Bausch Health
Assuming the 90 days trading horizon Northstar Clean Technologies is expected to generate 1.06 times more return on investment than Bausch Health. However, Northstar Clean is 1.06 times more volatile than Bausch Health Companies. It trades about 0.15 of its potential returns per unit of risk. Bausch Health Companies is currently generating about -0.01 per unit of risk. If you would invest 25.00 in Northstar Clean Technologies on August 29, 2024 and sell it today you would earn a total of 3.00 from holding Northstar Clean Technologies or generate 12.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northstar Clean Technologies vs. Bausch Health Companies
Performance |
| Timeline |
| Northstar Clean Tech |
| Bausch Health Companies |
Northstar Clean and Bausch Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northstar Clean and Bausch Health
The main advantage of trading using opposite Northstar Clean and Bausch Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northstar Clean 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.The idea behind Northstar Clean Technologies 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 Health vs. Auxly Cannabis Group | Bausch Health vs. Entourage Health Corp | Bausch Health vs. iShares Canadian HYBrid | Bausch Health vs. Altagas Cum Red |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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