Correlation Between Viridian Therapeutics and Bausch Health
Can any of the company-specific risk be diversified away by investing in both Viridian Therapeutics 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 Viridian Therapeutics and Bausch Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Viridian Therapeutics and Bausch Health Companies, you can compare the effects of market volatilities on Viridian Therapeutics 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 Viridian Therapeutics with a short position of Bausch Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Viridian Therapeutics and Bausch Health.
Diversification Opportunities for Viridian Therapeutics and Bausch Health
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Viridian and Bausch is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Viridian Therapeutics 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 Viridian Therapeutics 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 Viridian Therapeutics 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 Viridian Therapeutics i.e., Viridian Therapeutics and Bausch Health go up and down completely randomly.
Pair Corralation between Viridian Therapeutics and Bausch Health
Given the investment horizon of 90 days Viridian Therapeutics is expected to generate 1.71 times more return on investment than Bausch Health. However, Viridian Therapeutics is 1.71 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 0.16 per unit of risk. If you would invest 1,447 in Viridian Therapeutics on August 31, 2024 and sell it today you would earn a total of 740.00 from holding Viridian Therapeutics or generate 51.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Viridian Therapeutics vs. Bausch Health Companies
Performance |
| Timeline |
| Viridian Therapeutics |
| Bausch Health Companies |
Viridian Therapeutics and Bausch Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Viridian Therapeutics and Bausch Health
The main advantage of trading using opposite Viridian Therapeutics and Bausch Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Viridian Therapeutics 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.| Viridian Therapeutics vs. Nuvalent | Viridian Therapeutics vs. Arcellx | Viridian Therapeutics vs. Vaxcyte | Viridian Therapeutics vs. Crinetics Pharmaceuticals |
| 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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