Correlation Between Guardant Health and Surgery Partners

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

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

Diversification Opportunities for Guardant Health and Surgery Partners

-0.77

Correlation Coefficient

Guardant Health  Surgery Partners

Pay attention - limited upside

The 3 months correlation between Guardant and Surgery is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Guardant Health and Surgery Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surgery Partners 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 Surgery Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surgery Partners has no effect on the direction of Guardant Health i.e., Guardant Health and Surgery Partners go up and down completely randomly.

Pair Corralation between Guardant Health and Surgery Partners

Allowing for the 90-day total investment horizon Guardant Health is expected to generate 1.29 times more return on investment than Surgery Partners. However, Guardant Health is 1.29 times more volatile than Surgery Partners. It trades about 0.17 of its potential returns per unit of risk. Surgery Partners is currently generating about -0.13 per unit of risk. If you would invest  2,457  in Guardant Health on September 3, 2024 and sell it today you would earn a total of  1,095  from holding Guardant Health or generate 44.57% 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.  Surgery Partners

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.

Surgery Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Surgery Partners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Guardant Health and Surgery Partners

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

The idea behind Guardant Health and Surgery Partners 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.