Correlation Between Compass Pathways and Guardian Pharmacy

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

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

Diversification Opportunities for Compass Pathways and Guardian Pharmacy

-0.74

Correlation Coefficient

Compass Pathways  Guardian Pharmacy

Pay attention - limited upside

The 3 months correlation between Compass and Guardian is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Compass Pathways Plc and Guardian Pharmacy Services, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardian Pharmacy and Compass Pathways 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 Compass Pathways Plc 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 Compass Pathways i.e., Compass Pathways and Guardian Pharmacy go up and down completely randomly.

Pair Corralation between Compass Pathways and Guardian Pharmacy

Given the investment horizon of 90 days Compass Pathways Plc is expected to generate 1.27 times more return on investment than Guardian Pharmacy. However, Compass Pathways is 1.27 times more volatile than Guardian Pharmacy Services,. It trades about 0.09 of its potential returns per unit of risk. Guardian Pharmacy Services, is currently generating about -0.24 per unit of risk. If you would invest  414.00  in Compass Pathways Plc on October 5, 2024 and sell it today you would earn a total of  31.00  from holding Compass Pathways Plc or generate 7.49% return on investment over 90 days.

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

Compass Pathways Plc  vs.  Guardian Pharmacy Services,

Compass Pathways Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compass Pathways Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Guardian Pharmacy

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Guardian Pharmacy Services, are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, Guardian Pharmacy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Compass Pathways and Guardian Pharmacy

The main advantage of trading using opposite Compass Pathways and Guardian Pharmacy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compass Pathways 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 Compass Pathways Plc 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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.