Correlation Between Veracyte and Guardant Health

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Can any of the company-specific risk be diversified away by investing in both Veracyte 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 Veracyte and Guardant Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Veracyte and Guardant Health, you can compare the effects of market volatilities on Veracyte 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 Veracyte with a short position of Guardant Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Veracyte and Guardant Health.

Diversification Opportunities for Veracyte and Guardant Health

VeracyteGuardantDiversified AwayVeracyteGuardantDiversified Away100%
0.53
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Veracyte and Guardant is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Veracyte and Guardant Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardant Health and Veracyte 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 Veracyte 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 has no effect on the direction of Veracyte i.e., Veracyte and Guardant Health go up and down completely randomly.

Pair Corralation between Veracyte and Guardant Health

Given the investment horizon of 90 days Veracyte is expected to under-perform the Guardant Health. But the stock apears to be less risky and, when comparing its historical volatility, Veracyte is 1.24 times less risky than Guardant Health. The stock trades about -0.18 of its potential returns per unit of risk. The Guardant Health is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  4,721  in Guardant Health on November 25, 2024 and sell it today you would lose (434.00) from holding Guardant Health or give up 9.19% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Veracyte  vs.  Guardant Health

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb 0102030405060
JavaScript chart by amCharts 3.21.15VCYT GH
       Timeline  
Veracyte 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Veracyte has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Veracyte is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb38394041424344454647
Guardant Health 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Guardant Health are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Guardant Health demonstrated solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb3035404550

Veracyte and Guardant Health Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-9.06-6.79-4.51-2.240.03882.334.656.989.31 0.0200.0250.0300.0350.0400.045
JavaScript chart by amCharts 3.21.15VCYT GH
       Returns  

Pair Trading with Veracyte and Guardant Health

The main advantage of trading using opposite Veracyte and Guardant Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Veracyte 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.
The idea behind Veracyte and Guardant Health pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.

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