Correlation Between United Homes and Guardian Pharmacy

Can any of the company-specific risk be diversified away by investing in both United Homes and Guardian Pharmacy 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 United Homes and Guardian Pharmacy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between United Homes Group and Guardian Pharmacy Services,, you can compare the effects of market volatilities on United Homes and Guardian Pharmacy 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 United Homes with a short position of Guardian Pharmacy. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Homes and Guardian Pharmacy.

Diversification Opportunities for United Homes and Guardian Pharmacy

-0.22

Correlation Coefficient

United Homes  Guardian Pharmacy

Very good diversification

The 3 months correlation between United and Guardian is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding United Homes Group and Guardian Pharmacy Services, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardian Pharmacy and United Homes 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 United Homes Group are associated (or correlated) with Guardian Pharmacy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardian Pharmacy has no effect on the direction of United Homes i.e., United Homes and Guardian Pharmacy go up and down completely randomly.

Pair Corralation between United Homes and Guardian Pharmacy

Considering the 90-day investment horizon United Homes Group is expected to under-perform the Guardian Pharmacy. In addition to that, United Homes is 1.3 times more volatile than Guardian Pharmacy Services,. It trades about -0.04 of its total potential returns per unit of risk. Guardian Pharmacy Services, is currently generating about 0.25 per unit of volatility. If you would invest  1,600  in Guardian Pharmacy Services, on September 13, 2024 and sell it today you would earn a total of  917.00  from holding Guardian Pharmacy Services, or generate 57.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.94%
Values	Daily Returns

United Homes Group  vs.  Guardian Pharmacy Services,

United Homes Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Homes Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Guardian Pharmacy

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Guardian Pharmacy Services, are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, Guardian Pharmacy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with United Homes and Guardian Pharmacy

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

The idea behind United Homes Group and Guardian Pharmacy Services, 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.