Correlation Between United Homes and Bausch Lomb
Can any of the company-specific risk be diversified away by investing in both United Homes 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 Homes 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 Homes Group and Bausch Lomb Corp, you can compare the effects of market volatilities on United Homes 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 Homes with a short position of Bausch Lomb. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Homes and Bausch Lomb.
Diversification Opportunities for United Homes and Bausch Lomb
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between United and Bausch is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding United Homes 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 Homes 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 Homes 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 Homes i.e., United Homes and Bausch Lomb go up and down completely randomly.
Pair Corralation between United Homes and Bausch Lomb
Considering the 90-day investment horizon United Homes Group is expected to generate 2.64 times more return on investment than Bausch Lomb. However, United Homes is 2.64 times more volatile than Bausch Lomb Corp. It trades about 0.12 of its potential returns per unit of risk. Bausch Lomb Corp is currently generating about -0.06 per unit of risk. If you would invest 559.00 in United Homes Group on August 31, 2024 and sell it today you would earn a total of 53.00 from holding United Homes Group or generate 9.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Homes Group vs. Bausch Lomb Corp
Performance |
| Timeline |
| United Homes Group |
| Bausch Lomb Corp |
United Homes and Bausch Lomb Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Homes and Bausch Lomb
The main advantage of trading using opposite United Homes and Bausch Lomb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Homes 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 Homes vs. Century Communities | United Homes vs. Dream Finders Homes | United Homes vs. DR Horton | United Homes vs. Everus Construction Group |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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