Correlation Between GUARDANT HEALTH and Microsoft
Can any of the company-specific risk be diversified away by investing in both GUARDANT HEALTH and Microsoft 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 Microsoft 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 Microsoft, you can compare the effects of market volatilities on GUARDANT HEALTH and Microsoft 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 Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of GUARDANT HEALTH and Microsoft.
Diversification Opportunities for GUARDANT HEALTH and Microsoft
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GUARDANT and Microsoft is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding GUARDANT HEALTH CL and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft 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 Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of GUARDANT HEALTH i.e., GUARDANT HEALTH and Microsoft go up and down completely randomly.
Pair Corralation between GUARDANT HEALTH and Microsoft
Assuming the 90 days horizon GUARDANT HEALTH CL is expected to generate 3.04 times more return on investment than Microsoft. However, GUARDANT HEALTH is 3.04 times more volatile than Microsoft. It trades about 0.09 of its potential returns per unit of risk. Microsoft is currently generating about 0.01 per unit of risk. If you would invest 2,385 in GUARDANT HEALTH CL on August 28, 2024 and sell it today you would earn a total of 1,014 from holding GUARDANT HEALTH CL or generate 42.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GUARDANT HEALTH CL vs. Microsoft
Performance |
| Timeline |
| GUARDANT HEALTH CL |
| Microsoft |
GUARDANT HEALTH and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GUARDANT HEALTH and Microsoft
The main advantage of trading using opposite GUARDANT HEALTH and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GUARDANT HEALTH position performs unexpectedly, Microsoft 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 Microsoft will offset losses from the drop in Microsoft's long position.| GUARDANT HEALTH vs. CNVISION MEDIA | GUARDANT HEALTH vs. RCS MediaGroup SpA | GUARDANT HEALTH vs. Hollywood Bowl Group | GUARDANT HEALTH vs. Tencent Music Entertainment |
| Microsoft vs. United Airlines Holdings | Microsoft vs. JAPAN AIRLINES | Microsoft vs. G III APPAREL GROUP | Microsoft vs. LIFENET INSURANCE CO |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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