Correlation Between Guardant Health and Acadia Healthcare
Can any of the company-specific risk be diversified away by investing in both Guardant Health and Acadia Healthcare 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 Acadia Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guardant Health and Acadia Healthcare, you can compare the effects of market volatilities on Guardant Health and Acadia Healthcare 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 Acadia Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guardant Health and Acadia Healthcare.
Diversification Opportunities for Guardant Health and Acadia Healthcare
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Guardant and Acadia is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Guardant Health and Acadia Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acadia Healthcare 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 are associated (or correlated) with Acadia Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acadia Healthcare has no effect on the direction of Guardant Health i.e., Guardant Health and Acadia Healthcare go up and down completely randomly.
Pair Corralation between Guardant Health and Acadia Healthcare
Allowing for the 90-day total investment horizon Guardant Health is expected to generate 2.09 times more return on investment than Acadia Healthcare. However, Guardant Health is 2.09 times more volatile than Acadia Healthcare. It trades about 0.45 of its potential returns per unit of risk. Acadia Healthcare is currently generating about 0.21 per unit of risk. If you would invest 3,177 in Guardant Health on November 2, 2024 and sell it today you would earn a total of 1,817 from holding Guardant Health or generate 57.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guardant Health vs. Acadia Healthcare
Performance |
| Timeline |
| Guardant Health |
| Acadia Healthcare |
Guardant Health and Acadia Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guardant Health and Acadia Healthcare
The main advantage of trading using opposite Guardant Health and Acadia Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guardant Health position performs unexpectedly, Acadia Healthcare 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 Acadia Healthcare will offset losses from the drop in Acadia Healthcare's long position.| Guardant Health vs. Illumina | Guardant Health vs. Twist Bioscience Corp | Guardant Health vs. Natera Inc | Guardant Health vs. Caredx Inc |
| Acadia Healthcare vs. Encompass Health Corp | Acadia Healthcare vs. Pennant Group | Acadia Healthcare vs. Select Medical Holdings | Acadia Healthcare vs. Addus HomeCare |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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