Correlation Between CorVel Corp and Guardant Health

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

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

Diversification Opportunities for CorVel Corp and Guardant Health

-0.06

Correlation Coefficient

CorVel Corp  Guardant Health

Good diversification

The 3 months correlation between CorVel and Guardant is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding CorVel Corp and Guardant Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardant Health and CorVel Corp 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 CorVel Corp are associated (or correlated) with Guardant Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardant Health has no effect on the direction of CorVel Corp i.e., CorVel Corp and Guardant Health go up and down completely randomly.

Pair Corralation between CorVel Corp and Guardant Health

Given the investment horizon of 90 days CorVel Corp is expected to generate 0.3 times more return on investment than Guardant Health. However, CorVel Corp is 3.28 times less risky than Guardant Health. It trades about -0.26 of its potential returns per unit of risk. Guardant Health is currently generating about -0.15 per unit of risk. If you would invest  25,675  in CorVel Corp on January 29, 2024 and sell it today you would lose (1,811) from holding CorVel Corp or give up 7.05% of portfolio value over 90 days.

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

CorVel Corp  vs.  Guardant Health

CorVel Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CorVel Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, CorVel Corp is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Guardant Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guardant Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in May 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with CorVel Corp and Guardant Health

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

The idea behind CorVel Corp and Guardant Health 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.