Correlation Between Guardant Health and Monogram Orthopaedics

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

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

Diversification Opportunities for Guardant Health and Monogram Orthopaedics

-0.35

Correlation Coefficient

Guardant Health  Monogram Orthopaedics

Very good diversification

The 3 months correlation between Guardant and Monogram is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Guardant Health and Monogram Orthopaedics Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monogram Orthopaedics 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 Monogram Orthopaedics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monogram Orthopaedics has no effect on the direction of Guardant Health i.e., Guardant Health and Monogram Orthopaedics go up and down completely randomly.

Pair Corralation between Guardant Health and Monogram Orthopaedics

Allowing for the 90-day total investment horizon Guardant Health is expected to generate 0.54 times more return on investment than Monogram Orthopaedics. However, Guardant Health is 1.84 times less risky than Monogram Orthopaedics. It trades about 0.01 of its potential returns per unit of risk. Monogram Orthopaedics Common is currently generating about -0.03 per unit of risk. If you would invest  4,478  in Guardant Health on September 3, 2024 and sell it today you would lose (917.00) from holding Guardant Health or give up 20.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	78.38%
Values	Daily Returns

Guardant Health  vs.  Monogram Orthopaedics Common

Guardant Health

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guardant Health are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical indicators, Guardant Health demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Monogram Orthopaedics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Monogram Orthopaedics Common has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Guardant Health and Monogram Orthopaedics

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

The idea behind Guardant Health and Monogram Orthopaedics Common 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.