Correlation Between Takeda Pharmaceutical and Bausch Health
Can any of the company-specific risk be diversified away by investing in both Takeda Pharmaceutical 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 Takeda Pharmaceutical and Bausch Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Takeda Pharmaceutical Co and Bausch Health Companies, you can compare the effects of market volatilities on Takeda Pharmaceutical 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 Takeda Pharmaceutical with a short position of Bausch Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Takeda Pharmaceutical and Bausch Health.
Diversification Opportunities for Takeda Pharmaceutical and Bausch Health
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Takeda and Bausch is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Takeda Pharmaceutical Co 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 Takeda Pharmaceutical 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 Takeda Pharmaceutical Co 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 Takeda Pharmaceutical i.e., Takeda Pharmaceutical and Bausch Health go up and down completely randomly.
Pair Corralation between Takeda Pharmaceutical and Bausch Health
Considering the 90-day investment horizon Takeda Pharmaceutical Co is expected to under-perform the Bausch Health. But the stock apears to be less risky and, when comparing its historical volatility, Takeda Pharmaceutical Co is 3.56 times less risky than Bausch Health. The stock trades about -0.12 of its potential returns per unit of risk. The Bausch Health Companies is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 607.00 in Bausch Health Companies on August 31, 2024 and sell it today you would earn a total of 205.00 from holding Bausch Health Companies or generate 33.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Takeda Pharmaceutical Co vs. Bausch Health Companies
Performance |
| Timeline |
| Takeda Pharmaceutical |
| Bausch Health Companies |
Takeda Pharmaceutical and Bausch Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Takeda Pharmaceutical and Bausch Health
The main advantage of trading using opposite Takeda Pharmaceutical and Bausch Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Takeda Pharmaceutical 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.| Takeda Pharmaceutical vs. Emergent Biosolutions | Takeda Pharmaceutical vs. Bausch Health Companies | Takeda Pharmaceutical vs. Neurocrine Biosciences | Takeda Pharmaceutical vs. Teva Pharma Industries |
| Bausch Health vs. Emergent Biosolutions | Bausch Health vs. Neurocrine Biosciences | Bausch Health vs. Teva Pharma Industries | Bausch Health vs. Haleon plc |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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