Correlation Between GUARDANT HEALTH and MIRAMAR HOTEL

Can any of the company-specific risk be diversified away by investing in both GUARDANT HEALTH and MIRAMAR HOTEL 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 MIRAMAR HOTEL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GUARDANT HEALTH CL and MIRAMAR HOTEL INV, you can compare the effects of market volatilities on GUARDANT HEALTH and MIRAMAR HOTEL 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 MIRAMAR HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of GUARDANT HEALTH and MIRAMAR HOTEL.

Diversification Opportunities for GUARDANT HEALTH and MIRAMAR HOTEL

0.31

Correlation Coefficient

GUARDANT HEALTH  MIRAMAR HOTEL

Weak diversification

The 3 months correlation between GUARDANT and MIRAMAR is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding GUARDANT HEALTH CL and MIRAMAR HOTEL INV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MIRAMAR HOTEL INV 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 CL are associated (or correlated) with MIRAMAR HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MIRAMAR HOTEL INV has no effect on the direction of GUARDANT HEALTH i.e., GUARDANT HEALTH and MIRAMAR HOTEL go up and down completely randomly.

Pair Corralation between GUARDANT HEALTH and MIRAMAR HOTEL

Assuming the 90 days horizon GUARDANT HEALTH is expected to generate 4.54 times less return on investment than MIRAMAR HOTEL. In addition to that, GUARDANT HEALTH is 1.52 times more volatile than MIRAMAR HOTEL INV. It trades about 0.01 of its total potential returns per unit of risk. MIRAMAR HOTEL INV is currently generating about 0.07 per unit of volatility. If you would invest  65.00  in MIRAMAR HOTEL INV on October 4, 2024 and sell it today you would earn a total of  48.00  from holding MIRAMAR HOTEL INV or generate 73.85% return on investment over 90 days.

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

GUARDANT HEALTH CL  vs.  MIRAMAR HOTEL INV

GUARDANT HEALTH CL

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GUARDANT HEALTH CL are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, GUARDANT HEALTH reported solid returns over the last few months and may actually be approaching a breakup point.

MIRAMAR HOTEL INV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MIRAMAR HOTEL INV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, MIRAMAR HOTEL is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with GUARDANT HEALTH and MIRAMAR HOTEL

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

The idea behind GUARDANT HEALTH CL and MIRAMAR HOTEL INV 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.