Correlation Between IShares Canadian and Bausch Health
Can any of the company-specific risk be diversified away by investing in both IShares Canadian 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 IShares Canadian and Bausch Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Canadian HYBrid and Bausch Health Companies, you can compare the effects of market volatilities on IShares Canadian 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 IShares Canadian with a short position of Bausch Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Canadian and Bausch Health.
Diversification Opportunities for IShares Canadian and Bausch Health
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Bausch is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian HYBrid 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 IShares Canadian 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 iShares Canadian HYBrid 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 IShares Canadian i.e., IShares Canadian and Bausch Health go up and down completely randomly.
Pair Corralation between IShares Canadian and Bausch Health
Assuming the 90 days trading horizon IShares Canadian is expected to generate 5.78 times less return on investment than Bausch Health. But when comparing it to its historical volatility, iShares Canadian HYBrid is 13.61 times less risky than Bausch Health. It trades about 0.16 of its potential returns per unit of risk. Bausch Health Companies is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,137 in Bausch Health Companies on August 31, 2024 and sell it today you would earn a total of 48.00 from holding Bausch Health Companies or generate 4.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Canadian HYBrid vs. Bausch Health Companies
Performance |
| Timeline |
| iShares Canadian HYBrid |
| Bausch Health Companies |
IShares Canadian and Bausch Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Canadian and Bausch Health
The main advantage of trading using opposite IShares Canadian and Bausch Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Canadian 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.| IShares Canadian vs. iShares IG Corporate | IShares Canadian vs. iShares High Yield | IShares Canadian vs. iShares Floating Rate | IShares Canadian vs. iShares JP Morgan |
| Bausch Health vs. iShares Canadian HYBrid | Bausch Health vs. Brompton European Dividend | Bausch Health vs. Solar Alliance Energy | Bausch Health vs. PHN Multi Style All Cap |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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