Correlation Between Rheinmetall and GUARDANT HEALTH
Can any of the company-specific risk be diversified away by investing in both Rheinmetall 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 Rheinmetall and GUARDANT HEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rheinmetall AG and GUARDANT HEALTH CL, you can compare the effects of market volatilities on Rheinmetall 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 Rheinmetall with a short position of GUARDANT HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rheinmetall and GUARDANT HEALTH.
Diversification Opportunities for Rheinmetall and GUARDANT HEALTH
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Rheinmetall and GUARDANT is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Rheinmetall AG 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 Rheinmetall 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 Rheinmetall AG 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 Rheinmetall i.e., Rheinmetall and GUARDANT HEALTH go up and down completely randomly.
Pair Corralation between Rheinmetall and GUARDANT HEALTH
Assuming the 90 days trading horizon Rheinmetall is expected to generate 1.83 times less return on investment than GUARDANT HEALTH. But when comparing it to its historical volatility, Rheinmetall AG is 2.59 times less risky than GUARDANT HEALTH. It trades about 0.58 of its potential returns per unit of risk. GUARDANT HEALTH CL is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 2,106 in GUARDANT HEALTH CL on September 1, 2024 and sell it today you would earn a total of 1,212 from holding GUARDANT HEALTH CL or generate 57.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Rheinmetall AG vs. GUARDANT HEALTH CL
Performance |
| Timeline |
| Rheinmetall AG |
| GUARDANT HEALTH CL |
Rheinmetall and GUARDANT HEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rheinmetall and GUARDANT HEALTH
The main advantage of trading using opposite Rheinmetall and GUARDANT HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rheinmetall 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.| Rheinmetall vs. Entravision Communications | Rheinmetall vs. Ares Management Corp | Rheinmetall vs. Charter Communications | Rheinmetall vs. Highlight Communications AG |
| 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 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.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |