Correlation Between Fate Therapeutics and Guardant Health
Can any of the company-specific risk be diversified away by investing in both Fate Therapeutics and Guardant Health 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 Fate Therapeutics and Guardant Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fate Therapeutics and Guardant Health, you can compare the effects of market volatilities on Fate Therapeutics and Guardant Health 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 Fate Therapeutics with a short position of Guardant Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fate Therapeutics and Guardant Health.
Diversification Opportunities for Fate Therapeutics and Guardant Health
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fate and Guardant is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Fate Therapeutics and Guardant Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardant Health and Fate Therapeutics 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 Fate Therapeutics are associated (or correlated) with Guardant Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardant Health has no effect on the direction of Fate Therapeutics i.e., Fate Therapeutics and Guardant Health go up and down completely randomly.
Pair Corralation between Fate Therapeutics and Guardant Health
Given the investment horizon of 90 days Fate Therapeutics is expected to under-perform the Guardant Health. In addition to that, Fate Therapeutics is 1.38 times more volatile than Guardant Health. It trades about -0.03 of its total potential returns per unit of risk. Guardant Health is currently generating about 0.05 per unit of volatility. If you would invest 2,715 in Guardant Health on November 9, 2024 and sell it today you would earn a total of 1,894 from holding Guardant Health or generate 69.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fate Therapeutics vs. Guardant Health
Performance |
| Timeline |
| Fate Therapeutics |
| Guardant Health |
Fate Therapeutics and Guardant Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fate Therapeutics and Guardant Health
The main advantage of trading using opposite Fate Therapeutics and Guardant Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fate Therapeutics position performs unexpectedly, Guardant Health 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 Guardant Health will offset losses from the drop in Guardant Health's long position.| Fate Therapeutics vs. Atara Biotherapeutics | Fate Therapeutics vs. Sana Biotechnology | Fate Therapeutics vs. Caribou Biosciences | Fate Therapeutics vs. Arcus Biosciences |
| Guardant Health vs. Illumina | Guardant Health vs. Twist Bioscience Corp | Guardant Health vs. Natera Inc | Guardant Health vs. Caredx Inc |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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