Correlation Between Guardant Health and Masimo
Can any of the company-specific risk be diversified away by investing in both Guardant Health and Masimo 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 Masimo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guardant Health and Masimo, you can compare the effects of market volatilities on Guardant Health and Masimo 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 Masimo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guardant Health and Masimo.
Diversification Opportunities for Guardant Health and Masimo
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Guardant and Masimo is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Guardant Health and Masimo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Masimo 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 Masimo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Masimo has no effect on the direction of Guardant Health i.e., Guardant Health and Masimo go up and down completely randomly.
Pair Corralation between Guardant Health and Masimo
Allowing for the 90-day total investment horizon Guardant Health is expected to generate 1.92 times more return on investment than Masimo. However, Guardant Health is 1.92 times more volatile than Masimo. It trades about 0.19 of its potential returns per unit of risk. Masimo is currently generating about 0.22 per unit of risk. If you would invest 2,457 in Guardant Health on November 2, 2024 and sell it today you would earn a total of 2,537 from holding Guardant Health or generate 103.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guardant Health vs. Masimo
Performance |
| Timeline |
| Guardant Health |
| Masimo |
Guardant Health and Masimo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guardant Health and Masimo
The main advantage of trading using opposite Guardant Health and Masimo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guardant Health position performs unexpectedly, Masimo 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 Masimo will offset losses from the drop in Masimo's long position.| 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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