Correlation Between MSP Recovery and Bausch Lomb

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

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

Diversification Opportunities for MSP Recovery and Bausch Lomb

-0.33

Correlation Coefficient

MSP Recovery  Bausch Lomb

Very good diversification

The 3 months correlation between MSP and Bausch is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding MSP Recovery 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 MSP Recovery 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 MSP Recovery 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 MSP Recovery i.e., MSP Recovery and Bausch Lomb go up and down completely randomly.

Pair Corralation between MSP Recovery and Bausch Lomb

Given the investment horizon of 90 days MSP Recovery is expected to generate 9.09 times more return on investment than Bausch Lomb. However, MSP Recovery is 9.09 times more volatile than Bausch Lomb Corp. It trades about 0.11 of its potential returns per unit of risk. Bausch Lomb Corp is currently generating about -0.1 per unit of risk. If you would invest  285.00  in MSP Recovery on September 13, 2024 and sell it today you would earn a total of  39.00  from holding MSP Recovery or generate 13.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

MSP Recovery  vs.  Bausch Lomb Corp

MSP Recovery

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MSP Recovery are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical and fundamental indicators, MSP Recovery showed solid returns over the last few months and may actually be approaching a breakup point.

Bausch Lomb Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bausch Lomb Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Bausch Lomb displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MSP Recovery and Bausch Lomb

The main advantage of trading using opposite MSP Recovery and Bausch Lomb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MSP Recovery 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.

The idea behind MSP Recovery and Bausch Lomb Corp 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.