Correlation Between DISTRICT METALS and GUARDANT HEALTH

Can any of the company-specific risk be diversified away by investing in both DISTRICT METALS 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 DISTRICT METALS and GUARDANT HEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DISTRICT METALS and GUARDANT HEALTH CL, you can compare the effects of market volatilities on DISTRICT METALS 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 DISTRICT METALS with a short position of GUARDANT HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of DISTRICT METALS and GUARDANT HEALTH.

Diversification Opportunities for DISTRICT METALS and GUARDANT HEALTH

-0.13

Correlation Coefficient

DISTRICT METALS  GUARDANT HEALTH

Good diversification

The 3 months correlation between DISTRICT and GUARDANT is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding DISTRICT METALS 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 DISTRICT METALS 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 DISTRICT METALS 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 DISTRICT METALS i.e., DISTRICT METALS and GUARDANT HEALTH go up and down completely randomly.

Pair Corralation between DISTRICT METALS and GUARDANT HEALTH

Assuming the 90 days trading horizon DISTRICT METALS is expected to generate 1.02 times less return on investment than GUARDANT HEALTH. In addition to that, DISTRICT METALS is 1.2 times more volatile than GUARDANT HEALTH CL. It trades about 0.13 of its total potential returns per unit of risk. GUARDANT HEALTH CL is currently generating about 0.16 per unit of volatility. If you would invest  2,289  in GUARDANT HEALTH CL on September 15, 2024 and sell it today you would earn a total of  1,052  from holding GUARDANT HEALTH CL or generate 45.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

DISTRICT METALS  vs.  GUARDANT HEALTH CL

DISTRICT METALS

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DISTRICT METALS are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, DISTRICT METALS reported solid returns over the last few months and may actually be approaching a breakup point.

GUARDANT HEALTH CL

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GUARDANT HEALTH CL are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, GUARDANT HEALTH reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DISTRICT METALS and GUARDANT HEALTH

The main advantage of trading using opposite DISTRICT METALS and GUARDANT HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DISTRICT METALS 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 DISTRICT METALS and GUARDANT HEALTH CL 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..