Correlation Between United Fire and Bausch Lomb
Can any of the company-specific risk be diversified away by investing in both United Fire and Bausch Lomb 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 United Fire and Bausch Lomb into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Fire Group and Bausch Lomb Corp, you can compare the effects of market volatilities on United Fire and Bausch Lomb 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 United Fire with a short position of Bausch Lomb. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Fire and Bausch Lomb.
Diversification Opportunities for United Fire and Bausch Lomb
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between United and Bausch is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding United Fire Group and Bausch Lomb Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bausch Lomb Corp and United Fire 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 United Fire Group are associated (or correlated) with Bausch Lomb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bausch Lomb Corp has no effect on the direction of United Fire i.e., United Fire and Bausch Lomb go up and down completely randomly.
Pair Corralation between United Fire and Bausch Lomb
Given the investment horizon of 90 days United Fire is expected to generate 1.61 times less return on investment than Bausch Lomb. In addition to that, United Fire is 1.1 times more volatile than Bausch Lomb Corp. It trades about 0.02 of its total potential returns per unit of risk. Bausch Lomb Corp is currently generating about 0.04 per unit of volatility. If you would invest 1,455 in Bausch Lomb Corp on September 12, 2024 and sell it today you would earn a total of 610.00 from holding Bausch Lomb Corp or generate 41.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Fire Group vs. Bausch Lomb Corp
Performance |
| Timeline |
| United Fire Group |
| Bausch Lomb Corp |
United Fire and Bausch Lomb Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Fire and Bausch Lomb
The main advantage of trading using opposite United Fire and Bausch Lomb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Fire position performs unexpectedly, Bausch Lomb 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 Lomb will offset losses from the drop in Bausch Lomb's long position.| United Fire vs. Donegal Group B | United Fire vs. Horace Mann Educators | United Fire vs. Donegal Group A | United Fire vs. Global Indemnity PLC |
| Bausch Lomb vs. The Cooper Companies, | Bausch Lomb vs. ICU Medical | Bausch Lomb vs. Hologic | Bausch Lomb vs. Becton Dickinson and |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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