Correlation Between Bausch Health and Eli Lilly
Can any of the company-specific risk be diversified away by investing in both Bausch Health and Eli Lilly 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 Bausch Health and Eli Lilly into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bausch Health Companies and Eli Lilly and, you can compare the effects of market volatilities on Bausch Health and Eli Lilly 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 Bausch Health with a short position of Eli Lilly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and Eli Lilly.
Diversification Opportunities for Bausch Health and Eli Lilly
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bausch and Eli is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and Eli Lilly and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eli Lilly and Bausch Health 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 Bausch Health Companies are associated (or correlated) with Eli Lilly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eli Lilly has no effect on the direction of Bausch Health i.e., Bausch Health and Eli Lilly go up and down completely randomly.
Pair Corralation between Bausch Health and Eli Lilly
Considering the 90-day investment horizon Bausch Health Companies is expected to generate 1.75 times more return on investment than Eli Lilly. However, Bausch Health is 1.75 times more volatile than Eli Lilly and. It trades about 0.07 of its potential returns per unit of risk. Eli Lilly and is currently generating about -0.12 per unit of risk. If you would invest 700.00 in Bausch Health Companies on September 16, 2024 and sell it today you would earn a total of 81.00 from holding Bausch Health Companies or generate 11.57% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Bausch Health Companies vs. Eli Lilly and
Performance |
Timeline |
Bausch Health Companies |
Eli Lilly |
Bausch Health and Eli Lilly Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bausch Health and Eli Lilly
The main advantage of trading using opposite Bausch Health and Eli Lilly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, Eli Lilly 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 Eli Lilly will offset losses from the drop in Eli Lilly's long position.Bausch Health vs. Emergent Biosolutions | Bausch Health vs. Neurocrine Biosciences | Bausch Health vs. Teva Pharma Industries | Bausch Health vs. Haleon plc |
Eli Lilly vs. Emergent Biosolutions | Eli Lilly vs. Bausch Health Companies | Eli Lilly vs. Neurocrine Biosciences | Eli Lilly vs. Teva Pharma 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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