Correlation Between Walmart and Bausch Health
Can any of the company-specific risk be diversified away by investing in both Walmart 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 Walmart and Bausch Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart Inc CDR and Bausch Health Companies, you can compare the effects of market volatilities on Walmart 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 Walmart with a short position of Bausch Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Bausch Health.
Diversification Opportunities for Walmart and Bausch Health
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Walmart and Bausch is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR 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 Walmart 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 Walmart Inc CDR 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 Walmart i.e., Walmart and Bausch Health go up and down completely randomly.
Pair Corralation between Walmart and Bausch Health
Assuming the 90 days trading horizon Walmart Inc CDR is expected to generate 0.33 times more return on investment than Bausch Health. However, Walmart Inc CDR is 3.06 times less risky than Bausch Health. It trades about 0.19 of its potential returns per unit of risk. Bausch Health Companies is currently generating about 0.01 per unit of risk. If you would invest 3,588 in Walmart Inc CDR on October 25, 2024 and sell it today you would earn a total of 456.00 from holding Walmart Inc CDR or generate 12.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart Inc CDR vs. Bausch Health Companies
Performance |
| Timeline |
| Walmart Inc CDR |
| Bausch Health Companies |
Walmart and Bausch Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Bausch Health
The main advantage of trading using opposite Walmart and Bausch Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart 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.| Walmart vs. XXIX Metal Corp | Walmart vs. Pace Metals | Walmart vs. Globex Mining Enterprises | Walmart vs. Lion One Metals |
| Bausch Health vs. Gildan Activewear | Bausch Health vs. Open Text Corp | Bausch Health vs. Waste Connections | Bausch Health vs. CCL Industries |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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