Correlation Between Western Sierra and Bausch Lomb
Can any of the company-specific risk be diversified away by investing in both Western Sierra 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 Western Sierra and Bausch Lomb into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Sierra Mining and Bausch Lomb Corp, you can compare the effects of market volatilities on Western Sierra 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 Western Sierra with a short position of Bausch Lomb. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Sierra and Bausch Lomb.
Diversification Opportunities for Western Sierra and Bausch Lomb
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and Bausch is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Western Sierra Mining 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 Western Sierra 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 Western Sierra Mining 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 Western Sierra i.e., Western Sierra and Bausch Lomb go up and down completely randomly.
Pair Corralation between Western Sierra and Bausch Lomb
Given the investment horizon of 90 days Western Sierra Mining is expected to generate 58.69 times more return on investment than Bausch Lomb. However, Western Sierra is 58.69 times more volatile than Bausch Lomb Corp. It trades about 0.14 of its potential returns per unit of risk. Bausch Lomb Corp is currently generating about 0.05 per unit of risk. If you would invest 1.60 in Western Sierra Mining on September 4, 2024 and sell it today you would lose (0.92) from holding Western Sierra Mining or give up 57.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Sierra Mining vs. Bausch Lomb Corp
Performance |
| Timeline |
| Western Sierra Mining |
| Bausch Lomb Corp |
Western Sierra and Bausch Lomb Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Sierra and Bausch Lomb
The main advantage of trading using opposite Western Sierra and Bausch Lomb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Sierra 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.| Western Sierra vs. Green Cures Botanical | Western Sierra vs. Cann American Corp | Western Sierra vs. Rimrock Gold Corp | Western Sierra vs. Galexxy Holdings |
| Bausch Lomb vs. The Cooper Companies, | Bausch Lomb vs. ICU Medical | Bausch Lomb vs. Hologic | Bausch Lomb vs. Becton Dickinson and |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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