Correlation Between Guardant Health and Tandem Diabetes

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

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

Diversification Opportunities for Guardant Health and Tandem Diabetes

-0.47

Correlation Coefficient

Guardant Health  Tandem Diabetes

Very good diversification

The 3 months correlation between Guardant and Tandem is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Guardant Health and Tandem Diabetes Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tandem Diabetes Care 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 Tandem Diabetes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tandem Diabetes Care has no effect on the direction of Guardant Health i.e., Guardant Health and Tandem Diabetes go up and down completely randomly.

Pair Corralation between Guardant Health and Tandem Diabetes

Allowing for the 90-day total investment horizon Guardant Health is expected to under-perform the Tandem Diabetes. But the stock apears to be less risky and, when comparing its historical volatility, Guardant Health is 1.37 times less risky than Tandem Diabetes. The stock trades about -0.18 of its potential returns per unit of risk. The Tandem Diabetes Care is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  3,122  in Tandem Diabetes Care on September 28, 2024 and sell it today you would earn a total of  615.00  from holding Tandem Diabetes Care or generate 19.7% return on investment over 90 days.

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

Guardant Health  vs.  Tandem Diabetes Care

Guardant Health

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guardant Health are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Guardant Health demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Tandem Diabetes Care

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tandem Diabetes Care has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Guardant Health and Tandem Diabetes

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

The idea behind Guardant Health and Tandem Diabetes Care 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.