Correlation Between GUARDANT HEALTH and Hexcel
Can any of the company-specific risk be diversified away by investing in both GUARDANT HEALTH and Hexcel 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 Hexcel 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 Hexcel, you can compare the effects of market volatilities on GUARDANT HEALTH and Hexcel 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 Hexcel. Check out your portfolio center. Please also check ongoing floating volatility patterns of GUARDANT HEALTH and Hexcel.
Diversification Opportunities for GUARDANT HEALTH and Hexcel
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GUARDANT and Hexcel is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding GUARDANT HEALTH CL and Hexcel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexcel 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 Hexcel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hexcel has no effect on the direction of GUARDANT HEALTH i.e., GUARDANT HEALTH and Hexcel go up and down completely randomly.
Pair Corralation between GUARDANT HEALTH and Hexcel
Assuming the 90 days horizon GUARDANT HEALTH CL is expected to generate 2.47 times more return on investment than Hexcel. However, GUARDANT HEALTH is 2.47 times more volatile than Hexcel. It trades about 0.18 of its potential returns per unit of risk. Hexcel is currently generating about 0.09 per unit of risk. If you would invest 2,252 in GUARDANT HEALTH CL on September 12, 2024 and sell it today you would earn a total of 1,167 from holding GUARDANT HEALTH CL or generate 51.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.46% |
| Values | Daily Returns |
GUARDANT HEALTH CL vs. Hexcel
Performance |
| Timeline |
| GUARDANT HEALTH CL |
| Hexcel |
GUARDANT HEALTH and Hexcel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GUARDANT HEALTH and Hexcel
The main advantage of trading using opposite GUARDANT HEALTH and Hexcel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GUARDANT HEALTH position performs unexpectedly, Hexcel 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 Hexcel will offset losses from the drop in Hexcel's long position.| GUARDANT HEALTH vs. DexCom Inc | GUARDANT HEALTH vs. IDEXX Laboratories | GUARDANT HEALTH vs. Superior Plus Corp | GUARDANT HEALTH vs. NMI Holdings |
| Hexcel vs. Verizon Communications | Hexcel vs. Iridium Communications | Hexcel vs. CHINA TELECOM H | Hexcel vs. Citic Telecom International |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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