Correlation Between Intel and Bausch

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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

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. But the stock apears to be less risky and, when comparing its historical volatility, Intel is 18.0 times less risky than Bausch. The stock trades about 0.0 of its potential returns per unit of risk. The Bausch Health Companies is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  6,869  in Bausch Health Companies on September 11, 2024 and sell it today you would lose (469.00) from holding Bausch Health Companies or give up 6.83% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy76.97%
ValuesDaily Returns

Intel  vs.  Bausch Health Companies

 Performance 
       Timeline  
Intel 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Intel is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.
Bausch Health Companies 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.

Intel and Bausch Volatility Contrast

   Predicted Return Density   
       Returns  

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.
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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