Correlation Between Seven West and Bausch Health
Can any of the company-specific risk be diversified away by investing in both Seven West 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 Seven West and Bausch Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seven West Media and Bausch Health Companies, you can compare the effects of market volatilities on Seven West 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 Seven West with a short position of Bausch Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seven West and Bausch Health.
Diversification Opportunities for Seven West and Bausch Health
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Seven and Bausch is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Seven West Media 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 Seven West 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 Seven West Media 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 Seven West i.e., Seven West and Bausch Health go up and down completely randomly.
Pair Corralation between Seven West and Bausch Health
Assuming the 90 days horizon Seven West Media is expected to generate 1.96 times more return on investment than Bausch Health. However, Seven West is 1.96 times more volatile than Bausch Health Companies. It trades about -0.04 of its potential returns per unit of risk. Bausch Health Companies is currently generating about -0.09 per unit of risk. If you would invest 8.95 in Seven West Media on September 24, 2024 and sell it today you would lose (0.85) from holding Seven West Media or give up 9.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seven West Media vs. Bausch Health Companies
Performance |
| Timeline |
| Seven West Media |
| Bausch Health Companies |
Seven West and Bausch Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seven West and Bausch Health
The main advantage of trading using opposite Seven West and Bausch Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seven West 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.| Seven West vs. Live Nation Entertainment | Seven West vs. CTS Eventim AG | Seven West vs. Fuji Media Holdings | Seven West vs. Cinemark Holdings |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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