Correlation Between Intel and Bausch

Can any of the company-specific risk be diversified away by investing in both Intel and Bausch 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 Intel and Bausch into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Intel and Bausch Health Companies, you can compare the effects of market volatilities on Intel and Bausch 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 Intel with a short position of Bausch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intel and Bausch.

Diversification Opportunities for Intel and Bausch

0.47

Correlation Coefficient

Intel  Bausch

Very weak diversification

The 3 months correlation between Intel and Bausch is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Intel 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 Intel 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 Intel are associated (or correlated) with Bausch. 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 Intel i.e., Intel and Bausch go up and down completely randomly.

Pair Corralation between Intel and Bausch

Given the investment horizon of 90 days Intel is expected to under-perform the Bausch. In addition to that, Intel is 1.15 times more volatile than Bausch Health Companies. It trades about -0.08 of its total potential returns per unit of risk. Bausch Health Companies is currently generating about 0.02 per unit of volatility. If you would invest  6,211  in Bausch Health Companies on September 11, 2024 and sell it today you would earn a total of  189.00  from holding Bausch Health Companies or generate 3.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	70.33%
Values	Daily Returns

Intel  vs.  Bausch Health Companies

Intel

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Intel may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Bausch Health Companies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bausch Health Companies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for Bausch Health Companies investors.

Pair Trading with Intel and Bausch

The main advantage of trading using opposite Intel and Bausch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel position performs unexpectedly, Bausch 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 will offset losses from the drop in Bausch's long position.

The idea behind Intel and Bausch Health Companies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..