Correlation Between GUARDANT HEALTH and Kforce

Can any of the company-specific risk be diversified away by investing in both GUARDANT HEALTH and Kforce 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 Kforce 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 Kforce Inc, you can compare the effects of market volatilities on GUARDANT HEALTH and Kforce 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 Kforce. Check out your portfolio center. Please also check ongoing floating volatility patterns of GUARDANT HEALTH and Kforce.

Diversification Opportunities for GUARDANT HEALTH and Kforce

0.73

Correlation Coefficient

GUARDANT HEALTH  Kforce

Poor diversification

The 3 months correlation between GUARDANT and Kforce is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding GUARDANT HEALTH CL and Kforce Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kforce Inc 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 Kforce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kforce Inc has no effect on the direction of GUARDANT HEALTH i.e., GUARDANT HEALTH and Kforce go up and down completely randomly.

Pair Corralation between GUARDANT HEALTH and Kforce

Assuming the 90 days horizon GUARDANT HEALTH CL is expected to under-perform the Kforce. In addition to that, GUARDANT HEALTH is 1.97 times more volatile than Kforce Inc. It trades about -0.21 of its total potential returns per unit of risk. Kforce Inc is currently generating about -0.04 per unit of volatility. If you would invest  5,463  in Kforce Inc on September 30, 2024 and sell it today you would lose (63.00) from holding Kforce Inc or give up 1.15% of portfolio value over 90 days.

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

GUARDANT HEALTH CL  vs.  Kforce Inc

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.

Kforce Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kforce Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Kforce is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with GUARDANT HEALTH and Kforce

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

The idea behind GUARDANT HEALTH CL and Kforce Inc 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.