Correlation Between GUARDANT HEALTH and NORDHEALTH
Can any of the company-specific risk be diversified away by investing in both GUARDANT HEALTH and NORDHEALTH 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 GUARDANT HEALTH and NORDHEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GUARDANT HEALTH CL and NORDHEALTH AS NK, you can compare the effects of market volatilities on GUARDANT HEALTH and NORDHEALTH 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 GUARDANT HEALTH with a short position of NORDHEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of GUARDANT HEALTH and NORDHEALTH.
Diversification Opportunities for GUARDANT HEALTH and NORDHEALTH
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GUARDANT and NORDHEALTH is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding GUARDANT HEALTH CL and NORDHEALTH AS NK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORDHEALTH AS NK and GUARDANT 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 GUARDANT HEALTH CL are associated (or correlated) with NORDHEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORDHEALTH AS NK has no effect on the direction of GUARDANT HEALTH i.e., GUARDANT HEALTH and NORDHEALTH go up and down completely randomly.
Pair Corralation between GUARDANT HEALTH and NORDHEALTH
Assuming the 90 days horizon GUARDANT HEALTH CL is expected to generate 0.76 times more return on investment than NORDHEALTH. However, GUARDANT HEALTH CL is 1.31 times less risky than NORDHEALTH. It trades about 0.41 of its potential returns per unit of risk. NORDHEALTH AS NK is currently generating about 0.03 per unit of risk. If you would invest 2,106 in GUARDANT HEALTH CL on September 1, 2024 and sell it today you would earn a total of 1,214 from holding GUARDANT HEALTH CL or generate 57.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GUARDANT HEALTH CL vs. NORDHEALTH AS NK
Performance |
| Timeline |
| GUARDANT HEALTH CL |
| NORDHEALTH AS NK |
GUARDANT HEALTH and NORDHEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GUARDANT HEALTH and NORDHEALTH
The main advantage of trading using opposite GUARDANT HEALTH and NORDHEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GUARDANT HEALTH position performs unexpectedly, NORDHEALTH 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 NORDHEALTH will offset losses from the drop in NORDHEALTH's long position.| GUARDANT HEALTH vs. ETFS Coffee ETC | GUARDANT HEALTH vs. Liberty Broadband | GUARDANT HEALTH vs. BJs Restaurants | GUARDANT HEALTH vs. KRISPY KREME DL 01 |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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