Correlation Between Westaim Corp and Bausch Health
Can any of the company-specific risk be diversified away by investing in both Westaim Corp 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 Westaim Corp and Bausch Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westaim Corp and Bausch Health Companies, you can compare the effects of market volatilities on Westaim Corp 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 Westaim Corp with a short position of Bausch Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westaim Corp and Bausch Health.
Diversification Opportunities for Westaim Corp and Bausch Health
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Westaim and Bausch is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Westaim Corp 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 Westaim Corp 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 Westaim Corp 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 Westaim Corp i.e., Westaim Corp and Bausch Health go up and down completely randomly.
Pair Corralation between Westaim Corp and Bausch Health
Assuming the 90 days horizon Westaim Corp is expected to generate 0.4 times more return on investment than Bausch Health. However, Westaim Corp is 2.5 times less risky than Bausch Health. It trades about 0.11 of its potential returns per unit of risk. Bausch Health Companies is currently generating about 0.02 per unit of risk. If you would invest 250.00 in Westaim Corp on September 3, 2024 and sell it today you would earn a total of 245.00 from holding Westaim Corp or generate 98.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westaim Corp vs. Bausch Health Companies
Performance |
| Timeline |
| Westaim Corp |
| Bausch Health Companies |
Westaim Corp and Bausch Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westaim Corp and Bausch Health
The main advantage of trading using opposite Westaim Corp and Bausch Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westaim Corp 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.| Westaim Corp vs. Pulse Seismic | Westaim Corp vs. Quarterhill | Westaim Corp vs. Kneat Inc | Westaim Corp vs. Trisura Group |
| Bausch Health vs. Westaim Corp | Bausch Health vs. Pulse Seismic | Bausch Health vs. Quarterhill | Bausch Health vs. TECSYS Inc |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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