Correlation Between Guardant Health and Outset Medical
Can any of the company-specific risk be diversified away by investing in both Guardant Health and Outset Medical 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 Outset Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guardant Health and Outset Medical, you can compare the effects of market volatilities on Guardant Health and Outset Medical 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 Outset Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guardant Health and Outset Medical.
Diversification Opportunities for Guardant Health and Outset Medical
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Guardant and Outset is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Guardant Health and Outset Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Outset Medical 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 Outset Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Outset Medical has no effect on the direction of Guardant Health i.e., Guardant Health and Outset Medical go up and down completely randomly.
Pair Corralation between Guardant Health and Outset Medical
Allowing for the 90-day total investment horizon Guardant Health is expected to generate 0.55 times more return on investment than Outset Medical. However, Guardant Health is 1.83 times less risky than Outset Medical. It trades about 0.04 of its potential returns per unit of risk. Outset Medical is currently generating about -0.05 per unit of risk. If you would invest 2,794 in Guardant Health on December 6, 2024 and sell it today you would earn a total of 1,223 from holding Guardant Health or generate 43.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guardant Health vs. Outset Medical
Performance |
| Timeline |
| Guardant Health |
| Outset Medical |
Guardant Health and Outset Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guardant Health and Outset Medical
The main advantage of trading using opposite Guardant Health and Outset Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guardant Health position performs unexpectedly, Outset Medical 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 Outset Medical will offset losses from the drop in Outset Medical's long position.| Guardant Health vs. Illumina | Guardant Health vs. Twist Bioscience Corp | Guardant Health vs. Natera Inc | Guardant Health vs. Caredx Inc |
| Outset Medical vs. Clearpoint Neuro | Outset Medical vs. Inspire Medical Systems | Outset Medical vs. Nevro Corp | Outset Medical vs. Si Bone |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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