Correlation Between Guardant Health and GeneDx Holdings

Can any of the company-specific risk be diversified away by investing in both Guardant Health and GeneDx 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 GeneDx 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 GeneDx Holdings Corp, you can compare the effects of market volatilities on Guardant Health and GeneDx 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 GeneDx Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guardant Health and GeneDx Holdings.

Diversification Opportunities for Guardant Health and GeneDx Holdings

0.66

Correlation Coefficient

Guardant Health  GeneDx Holdings

Poor diversification

The 3 months correlation between Guardant and GeneDx is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Guardant Health and GeneDx Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GeneDx Holdings Corp 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 GeneDx Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GeneDx Holdings Corp has no effect on the direction of Guardant Health i.e., Guardant Health and GeneDx Holdings go up and down completely randomly.

Pair Corralation between Guardant Health and GeneDx Holdings

Allowing for the 90-day total investment horizon Guardant Health is expected to generate 2.35 times less return on investment than GeneDx Holdings. But when comparing it to its historical volatility, Guardant Health is 2.0 times less risky than GeneDx Holdings. It trades about 0.14 of its potential returns per unit of risk. GeneDx Holdings Corp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  4,013  in GeneDx Holdings Corp on September 23, 2024 and sell it today you would earn a total of  3,727  from holding GeneDx Holdings Corp or generate 92.87% return on investment over 90 days.

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

Guardant Health  vs.  GeneDx Holdings Corp

Guardant Health

Risk-Adjusted Performance

11 of 100

Good

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.

GeneDx Holdings Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GeneDx Holdings Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent technical and fundamental indicators, GeneDx Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Guardant Health and GeneDx Holdings

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

The idea behind Guardant Health and GeneDx Holdings Corp 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.