Correlation Between Guardant Health and EXACT Sciences
Can any of the company-specific risk be diversified away by investing in both Guardant Health and EXACT Sciences 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 EXACT Sciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guardant Health and EXACT Sciences, you can compare the effects of market volatilities on Guardant Health and EXACT Sciences 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 EXACT Sciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guardant Health and EXACT Sciences.
Diversification Opportunities for Guardant Health and EXACT Sciences
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Guardant and EXACT is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Guardant Health and EXACT Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EXACT Sciences 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 EXACT Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EXACT Sciences has no effect on the direction of Guardant Health i.e., Guardant Health and EXACT Sciences go up and down completely randomly.
Pair Corralation between Guardant Health and EXACT Sciences
Allowing for the 90-day total investment horizon Guardant Health is expected to under-perform the EXACT Sciences. In addition to that, Guardant Health is 1.43 times more volatile than EXACT Sciences. It trades about -0.07 of its total potential returns per unit of risk. EXACT Sciences is currently generating about 0.0 per unit of volatility. If you would invest 6,422 in EXACT Sciences on January 24, 2024 and sell it today you would lose (181.00) from holding EXACT Sciences or give up 2.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guardant Health vs. EXACT Sciences
Performance |
| Timeline |
| Guardant Health |
| EXACT Sciences |
Guardant Health and EXACT Sciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guardant Health and EXACT Sciences
The main advantage of trading using opposite Guardant Health and EXACT Sciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guardant Health position performs unexpectedly, EXACT Sciences 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 EXACT Sciences will offset losses from the drop in EXACT Sciences' long position.| Guardant Health vs. Illumina | Guardant Health vs. Twist Bioscience Corp | Guardant Health vs. Natera Inc | Guardant Health vs. Caredx Inc |
| EXACT Sciences vs. Natera Inc | EXACT Sciences vs. Caredx Inc | EXACT Sciences vs. Illumina | EXACT Sciences vs. Twist Bioscience Corp |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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