Correlation Between Guardant Health and IQVIA Holdings

Can any of the company-specific risk be diversified away by investing in both Guardant Health and IQVIA Holdings 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 IQVIA Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guardant Health and IQVIA Holdings, you can compare the effects of market volatilities on Guardant Health and IQVIA Holdings 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 IQVIA Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guardant Health and IQVIA Holdings.

Diversification Opportunities for Guardant Health and IQVIA Holdings

-0.76

Correlation Coefficient

Guardant Health  IQVIA Holdings

Pay attention - limited upside

The 3 months correlation between Guardant and IQVIA is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Guardant Health and IQVIA Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQVIA Holdings 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 IQVIA Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQVIA Holdings has no effect on the direction of Guardant Health i.e., Guardant Health and IQVIA Holdings go up and down completely randomly.

Pair Corralation between Guardant Health and IQVIA Holdings

Allowing for the 90-day total investment horizon Guardant Health is expected to generate 2.2 times more return on investment than IQVIA Holdings. However, Guardant Health is 2.2 times more volatile than IQVIA Holdings. It trades about 0.05 of its potential returns per unit of risk. IQVIA Holdings is currently generating about 0.09 per unit of risk. If you would invest  3,068  in Guardant Health on September 21, 2024 and sell it today you would earn a total of  82.00  from holding Guardant Health or generate 2.67% 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.  IQVIA Holdings

Guardant Health

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guardant Health are ranked lower than 11 (%) 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.

IQVIA Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IQVIA Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Guardant Health and IQVIA Holdings

The main advantage of trading using opposite Guardant Health and IQVIA Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guardant Health position performs unexpectedly, IQVIA Holdings 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 IQVIA Holdings will offset losses from the drop in IQVIA Holdings' long position.

The idea behind Guardant Health and IQVIA Holdings 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.