Correlation Between Silver Spike and Guardion Health

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

By analyzing existing cross correlation between Silver Spike Investment and Guardion Health Sciences, you can compare the effects of market volatilities on Silver Spike and Guardion Health 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 Silver Spike with a short position of Guardion Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silver Spike and Guardion Health.

Diversification Opportunities for Silver Spike and Guardion Health

0.63

Correlation Coefficient

Silver Spike  Guardion Health

Poor diversification

The 3 months correlation between Silver and Guardion is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Silver Spike Investment and Guardion Health Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardion Health Sciences and Silver Spike 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 Silver Spike Investment are associated (or correlated) with Guardion Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardion Health Sciences has no effect on the direction of Silver Spike i.e., Silver Spike and Guardion Health go up and down completely randomly.

Pair Corralation between Silver Spike and Guardion Health

Given the investment horizon of 90 days Silver Spike Investment is expected to generate 0.16 times more return on investment than Guardion Health. However, Silver Spike Investment is 6.45 times less risky than Guardion Health. It trades about 0.15 of its potential returns per unit of risk. Guardion Health Sciences is currently generating about -0.03 per unit of risk. If you would invest  1,122  in Silver Spike Investment on September 5, 2024 and sell it today you would earn a total of  158.00  from holding Silver Spike Investment or generate 14.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	53.23%
Values	Daily Returns

Silver Spike Investment  vs.  Guardion Health Sciences

Silver Spike Investment

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Silver Spike Investment are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile forward indicators, Silver Spike exhibited solid returns over the last few months and may actually be approaching a breakup point.

Guardion Health Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guardion Health Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent 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 recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Silver Spike and Guardion Health

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

The idea behind Silver Spike Investment and Guardion Health Sciences 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.