Correlation Between SERI INDUSTRIAL and GUARDANT HEALTH
Can any of the company-specific risk be diversified away by investing in both SERI INDUSTRIAL 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 SERI INDUSTRIAL and GUARDANT HEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SERI INDUSTRIAL EO and GUARDANT HEALTH CL, you can compare the effects of market volatilities on SERI INDUSTRIAL 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 SERI INDUSTRIAL with a short position of GUARDANT HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of SERI INDUSTRIAL and GUARDANT HEALTH.
Diversification Opportunities for SERI INDUSTRIAL and GUARDANT HEALTH
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between SERI and GUARDANT is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding SERI INDUSTRIAL EO and GUARDANT HEALTH CL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GUARDANT HEALTH CL and SERI INDUSTRIAL 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 SERI INDUSTRIAL EO 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 CL has no effect on the direction of SERI INDUSTRIAL i.e., SERI INDUSTRIAL and GUARDANT HEALTH go up and down completely randomly.
Pair Corralation between SERI INDUSTRIAL and GUARDANT HEALTH
Assuming the 90 days trading horizon SERI INDUSTRIAL EO is expected to under-perform the GUARDANT HEALTH. But the stock apears to be less risky and, when comparing its historical volatility, SERI INDUSTRIAL EO is 1.09 times less risky than GUARDANT HEALTH. The stock trades about -0.05 of its potential returns per unit of risk. The GUARDANT HEALTH CL is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,491 in GUARDANT HEALTH CL on September 1, 2024 and sell it today you would earn a total of 827.00 from holding GUARDANT HEALTH CL or generate 33.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SERI INDUSTRIAL EO vs. GUARDANT HEALTH CL
Performance |
| Timeline |
| SERI INDUSTRIAL EO |
| GUARDANT HEALTH CL |
SERI INDUSTRIAL and GUARDANT HEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SERI INDUSTRIAL and GUARDANT HEALTH
The main advantage of trading using opposite SERI INDUSTRIAL and GUARDANT HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SERI INDUSTRIAL 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.| SERI INDUSTRIAL vs. Apple Inc | SERI INDUSTRIAL vs. Apple Inc | SERI INDUSTRIAL vs. Apple Inc | SERI INDUSTRIAL vs. Apple Inc |
| GUARDANT HEALTH vs. ETFS Coffee ETC | GUARDANT HEALTH vs. Liberty Broadband | GUARDANT HEALTH vs. BJs Restaurants | GUARDANT HEALTH vs. KRISPY KREME DL 01 |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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