Correlation Between Guardant Health and Fate Therapeutics
Can any of the company-specific risk be diversified away by investing in both Guardant Health and Fate Therapeutics 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 Fate Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guardant Health and Fate Therapeutics, you can compare the effects of market volatilities on Guardant Health and Fate Therapeutics 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 Fate Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guardant Health and Fate Therapeutics.
Diversification Opportunities for Guardant Health and Fate Therapeutics
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Guardant and Fate is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Guardant Health and Fate Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fate Therapeutics 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 Fate Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fate Therapeutics has no effect on the direction of Guardant Health i.e., Guardant Health and Fate Therapeutics go up and down completely randomly.
Pair Corralation between Guardant Health and Fate Therapeutics
Allowing for the 90-day total investment horizon Guardant Health is expected to generate 0.72 times more return on investment than Fate Therapeutics. However, Guardant Health is 1.38 times less risky than Fate Therapeutics. It trades about 0.05 of its potential returns per unit of risk. Fate Therapeutics is currently generating about -0.03 per unit of risk. 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 |
Guardant Health vs. Fate Therapeutics
Performance |
| Timeline |
| Guardant Health |
| Fate Therapeutics |
Guardant Health and Fate Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guardant Health and Fate Therapeutics
The main advantage of trading using opposite Guardant Health and Fate Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guardant Health position performs unexpectedly, Fate Therapeutics 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 Fate Therapeutics will offset losses from the drop in Fate Therapeutics' long position.| Guardant Health vs. Illumina | Guardant Health vs. Twist Bioscience Corp | Guardant Health vs. Natera Inc | Guardant Health vs. Caredx Inc |
| Fate Therapeutics vs. Atara Biotherapeutics | Fate Therapeutics vs. Sana Biotechnology | Fate Therapeutics vs. Caribou Biosciences | Fate Therapeutics vs. Arcus Biosciences |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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